Gold prices eased on Wednesday after well-received US economic data and a spate of upbeat corporate earnings deflected interest away from bullion on to higher-risk, higher-yielding assets. Concern over unrest in Egypt and the prospect that it could spread into the wider Middle East is continuing to put a floor on prices, though it is prompting little new buying.
-- Palladium flirts with 10-year high Spot gold was bid at $1,335.45 an ounce at 1551 GMT, against $1,340.45 late in New York on Tuesday. US gold futures for April delivery fell $5.20 an ounce to $1,335.10. Peter Hillyard, an analyst at ANZ Bank in London, said gold was lacking direction after its retreat from December's record high above $1,430 an ounce.
"The sell-off seemed to illustrate that people had lost faith in gold and could see much better places to invest," he said. "(But) I don't think people want to sell it. They are fearful about what is going to happen in the Middle East, and what really is going on in the markets.
"In an environment of negative real interest rates, we expect gold's 'store-of-value' characteristic to keep it well supported at the $1,400-1,450 an ounce level during 2011," said Citigroup analysts in a note. Concern over unrest in Egypt continued to support gold prices, however.
Opponents and supporters of President Hosni Mubarak fought with fists, stones and clubs in Cairo on Wednesday in what appeared to be a move by forces loyal to the Egyptian leader to end protests calling for him to quit. Mubarak's announcement that he would not stand in elections scheduled for September had angered protesters who want an immediate end to his 30-year rule.
"Political turmoil in Egypt couldn't have come at a better time for gold," said UBS in a note. "With demand from China, the largest physical consumer of late, slowing into the Lunar New Year, geopolitical risk has provided a new support. "Not that events in Egypt have injected a premium into the gold price - they have not - but they have kept more weak longs from liquidating and induced some short-covering." Among other precious metals, palladium rose towards its highest in nearly a decade after upbeat car sales numbers. The majority of palladium is used in catalytic converters.
General Motors Co and Chrysler posted US sales gains of more than 20 percent for January, while US auto sales rose 17 percent. Platinum was at $1,827.49 an ounce against $1,825, while palladium was at $817.22 against $819.47, having earlier matched its highest since March 2001 at $825.50. Silver was bid at $28.47 an ounce against $28.49.
Comments
Comments are closed.