Gold was little changed in a subdued European trading session on Wednesday, with market players looking for a clear direction before making their next move, dealers said.
The yellow metal was seen hovering in a narrow range in the coming days as the dollar stayed near a recent two-month high against the euro, but good physical demand was seen providing some support.
Spot gold was up at $463.05/463.75 an ounce by 1432 GMT versus $462.10/462.80 quoted in late New York trade on Tuesday.
"I still think it is increasingly vulnerable to the downside," said a precious metals trader with a global bank. "You are going to need a broader base of investment interest to see the market try anything meaningful on the upside."
He said people were watching currency movements and crude oil prices. The dollar held firm near a two-month high against the euro as comments from Federal Reserve officials suggested the currency would remain supported by rising US interest rates.
A strong dollar generally makes gold costlier for other currency holders and thus reduces appetite for the metal.
"The market will be fairly quiet in the next couple of days as it is looking for a direction," said a precious metals trader in London.
He said a price of $460 an ounce was a good level to hold for some time, with a view to breaking higher again.
Gold could face downward pressure from any sale of the metal by central banks and a further rise in the dollar value. It is also vulnerable to some profit-booking by investors, traders said.
The European Central Bank Gold Agreement allows its 15 signatories to sell up to 500 tonnes of bullion over the next 12 months. Some traders said the selling could start soon to take advantage of current prices, which are not much off last week's near-18-year high of $475.
Gold had risen on concerns that Hurricanes Katrina and Rita would cause lengthy shortfalls in US crude output and in the process drive up inflation.
"If it becomes clear that central banks have stepped up the pace of their sales with the new year ... or if it becomes clear that more scrap is coming through the market, then that might be a catalyst for a move on the downside," said Alan Williamson, metals analyst with HSBC Bank.
Gold should continue to hold around $460-$468 in the coming sessions but is vulnerable to a drop as talk of US interest rate increases add support to the dollar, The Bulliondesk.com said in a daily report.
"A correction back to $450-$452 would be healthy, with further dips likely to be well supported by physical dealers in India and the Middle East."
Silver rose to $7.28/7.31 an ounce from $7.25/7.28 in late New York.
Platinum was at $914/917 versus $913/917, with the market taking note of the news that the first-half trading at Britain's Johnson Matthey Plc, the world's biggest distributor of platinum, had been in line with expectations.
The company, which uses the metal to make ingredients for drugs and ceramic coatings as well as catalytic converters for cars, also maintained its guidance for the rest of the year, saying it expected profit for the second half to end-March to be ahead of the first six months.
Palladium was traded at $194/197, slightly up from $192/196.
Comments
Comments are closed.