Gold edged down in Asia on Monday after the dollar rebounded against other currencies, but the lower levels brought out buying interest that kept the yellow metal above a key support level of $422 an ounce. A meeting of the Group of Seven major economic powers over the weekend offered no surprises as it failed to agree on a debt cancellation plan for the world's poorest countries. In a statement at the end of the meeting, the G7 went no further than thanking the International Monetary Fund for a study on how its gold reserves could be used to help fund a total debt write-off.
However, the matter is far from dead. British finance minister Gordon Brown, who has made easing Africa's plight a personal crusade, predicted an agreement by the time the G7 leaders meet in Scotland in July.
Spot gold was trading at $423.70/424.50 an ounce after reaching a bid high of $424.25 on fresh physical buying from investors. That was down 0.2 percent from New York's last quoted levels of $424.60/425.40 an ounce on Friday, when gold gained nearly $1 after the dollar fell on weak US economic data.
Dealers expect gold to trade in a range of $420 to $430 an ounce this week while watching movements of the dollar against other currencies for direction, with eyes on $422. "I think $422 will provide a strong support because of the 200-day moving average, and it was also a previous range that has been holding for sometime," said one dealer in Singapore, which is Southeast Asia's biggest bullion trading centre.
"Looking at the charts, we are mirroring the euro fairly closely. The G7 meeting, as expected, was a bit of a non-event," he said. The euro fell from New York levels to $1.2887. The bullion market was awaiting reports on US producer and consumer prices due on Tuesday and Wednesday for signs of building inflationary pressure.
This would raise the prospect for more aggressive interest rate increases by the Federal Reserve that could boost the dollar and weigh on dollar-priced gold. On Hong Kong's Chinese Gold and Silver Exchange, gold was quoted at HK$3,935 per teal (37.5 gram ingot) down from of HK$3,938.
"The trend is a bit bearish after gold couldn't break through $430. I don't think the funds are keen to create long positions," one dealer in Hong Kong, a key bullion trading city in East Asia. Gold hit a three-week high at $429.70 an ounce last week.
"The teal market is a bit quiet and I think we are still in a consolidation period. There was light selling by the Japanese but gold is firmly holding at around $423," he said. In other precious metals, silver was quoted at $6.96/6.98 an ounce against $6.99/7.02 last quoted in the US market.
Spot platinum was at $860/865 an ounce, little changed from $861/865 late in New York. Palladium was at $195.00/200.50 an ounce, versus $197/200 late in the US market. The benchmark February gold futures contract in Tokyo Commodity Exchange fell two yen per gram at 1,473 yen.
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