Gold was on firm ground in tight ranges on Wednesday in Europe after inflationary worries fanned by record high oil prices helped push the metal to a near six-month high in Asian trade at $420.20.
Dealers said that although further gains could be possible later on this week, $420 per ounce looked like the top of bullion's trading range for the day.
Spot gold was at $418.75/419.50 per troy ounce by 1515 GMT compared with $418.00/418.75 quoted in New York late on Tuesday.
Slight pressure came from the dollar, which nudged higher against the euro at $1.2291 but trade was subdued ahead of US employment data due on Friday.
The market dipped towards $416 in the afternoon after the European Central Bank said that a national central bank had sold gold in the last week under the European Central Bank Gold sales Agreement, but it quickly recovered.
"The overall environment remains encouraging with the oil price expected to remain strong at least in the short term," Alexander Zumpfe of Dresdner Kleinwort Wasserstein said.
He saw support at $414, with the next upside target at $423 and then $425.
Oil prices extended record-setting highs above $51 for US crude on Wednesday, led by worries over the impact of Hurricane Ivan on US winter fuel stocks.
Silver was on solid ground, having outdone gold on the upside on Tuesday when the market pushed above resistance at $7.00 to its highest since mid-April on technical buying.
Spot silver stood at $7.16/7.19 compared with $7.05/7.08 late on Tuesday in New York. Dealers placed next resistance at $7.30 and said the market would be led by oil and the dollar.
HSBC metals analyst Alan Williamson said that some bulls could argue that bullion had broken free of the currency movements as Tuesday's leg up had little to do with the dollar.
"In this respect it is interesting to note that gold in euros has managed to break through the EUR340/oz level, rallying to the highest level since April," he said in a daily report.
"However, we remain sceptical..." as such claims in the past had usually resulted in a sharp move lower in either the dollar and/or gold, he added.
Platinum firmed up as a strike continued at the world's number one producer Angloplat.
The company said earlier on Wednesday that it was hopeful about a possible breakthrough in efforts to end the strike by thousands of workers.
Spot platinum rose to $842.00/846.00 from $837.00/842.00 previously.
Palladium also firmed to $224.00/228.00 from $217.00/223.00.
Comments
Comments are closed.