Gold advanced on Monday with the help of bargain hunting and a rebound in oil prices, but sentiment has been shaken by a surge in the US dollar, which had triggered a sell-off in commodities. Bullion shrugged off deadly fighting between Russia and Georgia and instead focused on the global economy amid signs US economic woes were spreading to the rest of the world.
Other precious metals bounced from their lowest levels in many months. Gold firmed to $862.25/863.25 an ounce from $855.40/857.00 late in New York on Friday, when it tumbled to a three-month low of $850.50 as the dollar had its biggest one-day gain against the euro.
Japanese investors were on the sidelines and dealers said gold's steady decline since rallying to a four-month high around $987 in mid-July suggested some investors had shifted their money back into currencies and equities. "Technically, the strong uptrend has already been broken. We may expect another round of selling in the next few days," said Louis Lok, a dealer at Bank of China in Hong Kong.
"I expect around $850 to be a very important level. If this level is broken, we may see stop-loss selling again," he said. Concerns about slowing growth and energy demand have pushed oil more than $30 from its July record peak above $147 a barrel, while broader commodity prices extended a decline after staging their biggest monthly fall in 10 years in July.
Gold, which is bought as a hedge against inflation and an alternative investment to bonds and currencies, is well below a lifetime high of $1,030.80 an ounce hit in March. "Seemingly economic factors are driving market sentiment at the moment rather than the geopolitical. Around $865 will be some sort of resistance," said Darren Heathcote of Investec Australia in Sydney.
"I think there will be levels in which physical buyers will return to the market," he said. The euro hit a six-month low of $1.4908, with analysts saying the dollar's gains were by no means a vote of confidence from investors, who have dumped the currency throughout the housing crisis and financial sector turmoil. Oil added $1.22 to $116.42 a barrel on worries the conflict between Russia and Georgia could disrupt energy exports from the Caspian region.
Georgia, a US ally, offered Russia a cease-fire and peace talks after pulling troops back from rebel South Ossetia's capital, and mediators began a mission to end the internationally condemned fighting. New York gold futures added $4.6 to $869.40 an ounce. Spot platinum rose to $1,565/1,575 an ounce from $1,543.00/1,563.00 late in New York.
The most active Tokyo platinum contract for June 2009 delivery on the Tokyo Commodity Exchange fell 28 yen per gram to 5,527 yen. Spot palladium rose to $331/339 an ounce from $329.00/337.00 an ounce, having fallen to its lowest level in nearly a year to $324 on Friday. Silver edged up to $15.37/15.45 an ounce from $15.23/15.31 late in New York. The metal tumbled to a seven-month low of $15.22 an ounce on Friday.
Comments
Comments are closed.