Spot gold traded quietly just above $400 an ounce in Asia on Thursday, waiting for the outcome of this week's meeting of the Group of Seven industrial nations that could provide fresh upward momentum for the metal.
The bullion market continued to track the fortunes of the US dollar. Gold touched a 15-year peak of $430.50 on January 6, when the dollar fell to a lifetime low against the euro.
There was speculation in the currency market that the G7 finance ministers and central bankers would not club together to stop the dollar's long slide. A weak dollar makes dollar-denominated gold an attractive investment for holders of other currencies.
At 0445 GMT, spot gold was traded at $400.25/401.00 an ounce compared with $400.50/401.25 last quoted in New York and London's Wednesday afternoon fix of $399.25.
"It's damn quiet," said Maggie Loh, a dealer at United Overseas Bank in Singapore.
Analysts said gold had entered a consolidation period after the 15-year peak.
Some said gold could breach a $395 an ounce support level - a previous peak seen in December - and fall to a low of $385 - also seen in December - before charging higher again.
Physical demand had resurfaced in Asia because of falling prices, some traders said, but many investors were waiting for more declines before taking fresh positions.
"It should be quiet in these two days. We will see a very narrow range trading of $398 to $402," said Loh.
"I hope it can come down slightly to $398 before it bounces back higher. At least, I've got some demand for my sales first," she said.
Tokyo gold futures firmed on gains in New York's COMEX market but dealers were cautious because prices now traded below the crucial 1,400 yen level.
The benchmark December 2004 gold contract on the Tokyo gold futures rose four yen per gram to 1,358 yen.
The dollar hovered in a tight range against major currencies with investors keeping to the sidelines ahead of the G7 meeting.
The dollar was at 105.53 yen and at $1.2530 per euro.
"I would expect the dollar to fall again if the G7 meeting fails to come up with any statement which can change its direction," said one Hong Kong bullion dealer.
"Today's market is so meaningless. Prices may trade at $400, but it doesn't mean anything. There's not much activity in Asia," he said.
In other precious metals, palladium was quoted at $234/239, silver at $6.13/6.15 and platinum at $822/827.
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