Gold rose two percent to touch a two-week high in thin European trade on Wednesday, with funds and investors seen pushing the market higher in the remaining days of the year, analysts said.
A weak dollar against the euro also helped the metal, which jumped about 6 percent in a week to cross a key level of $515 an ounce on Wednesday. Gold might target this month's near 25-year high of $540.90 early next year, they said.
"The funds are buying," said Peter Hillyard, head of metals sales at ANZ Investment Bank. "I think it is necessary for the funds to have their positions at the end of the year on a strong note."
Spot gold was at $516.10/516.90 by 1549 GMT after touching $517.70. That compared with $507.50/508.30 quoted in New York late on Tuesday, when it rose nearly $5.
Hillyard said gold was helped by the dollar, which eased nearly one percent against the euro after surprisingly strong German consumer sentiment data.
A cheaper dollar often encourages gold buying in foreign currencies and lifts prices, although gold has not strictly followed its historical inverse relationship with the US currency in the past several weeks.
"The market is going to stay pretty thin in the coming days," said James Moore, analyst at TheBulliondesk.com.
"We are going to see prices test back towards the $541 high we saw earlier this month," he said of the outlook for early next year.
Gold gained more than 20 percent from the start of 2005 as funds diversified money into commodities for better returns amid worries about economic growth, inflation and dollar stability.
"The overall outlook should remain bullish in the coming year," Standard Bank said in a report.
Physical buying fell in Asia because of volatile prices, but demand in India, the world's largest gold consumer, should rise in the wedding season that begins in mid-January.
High prices attracted selling of scrap gold in Singapore, a leading trading centre in Southeast Asia, dealers said.
In other precious metals, silver was at $8.89/8.92 an ounce after climbing to a two-week high of $8.90 on Wednesday. It closed in New York at $8.71/8.74.
Platinum was quoted at $967/972 an ounce, compared with $965/969 in New York. Palladium was up at $257/262 from $255/259 in the US market.
Comments
Comments are closed.