Gold steadied on Monday after investors pushed up the price to its highest level in a month last week, but record oil and a weaker US dollar may spur another round of buying. Platinum gave up early gains, silver held near a 1-week high while palladium dropped to its lowest level in two weeks before bouncing on bargain hunting.
Gold was at $927.40/928.40 an ounce, steady from $927.20/928.20 an ounce late in New York on Friday, when it rose as high as $930.40 as record high oil and weak stock markets triggered buying from investors.
"The dollar doesn't seem to have any luck at all and the oil price is at the higher end. Things seem to be in favour of gold for the time being," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. The physical market saw speculators cashing in gold's recent gains which may cap the upside, while jewellers waited for a correction. Premiums for gold bars were unchanged.
"Of course there's no physical buying. They will only buy if you hold a gun to their heads," said Leung, referring to jewellers who may step into the market if the price dips to $850 again.
In fundamental news, Japan's first bullion-backed exchange-traded fund started trading on the Tokyo Stock Exchange on Monday in a bid to draw more investors and enhance Tokyo as a financial centre.
Oil rose $1.69 a barrel to $141.90, hovering near last week's record high near $143, on a weak US dollar and tensions between Israel and Iran over Tehran's nuclear programme.
Rising energy costs boost gold's role as a hedge against inflation, while a weaker dollar elevates the metal's appeal as an alternative investment. The dollar hit a three-week low against the euro on the back of record high oil, fears about US growth and as Wall Street stocks extended their slide.
"I guess we are seeing light physical profit-taking and the Japanese are on the selling side, but the market is still in good shape," said a dealer in Hong Kong. Gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $1.2 an ounce to $930.1. Spot platinum rose to $2,054.00/2,074.00 an ounce from $2,053.50/2,073.50 late in New York. Spot palladium rose to $465.00/473.00 an ounce from $463.00/471.00 an ounce, having earlier hit a low of $446.50 an ounce.
Speculators booked profits after the price jumped to a three-month high of $477 on June 19. Silver rose to $17.58/17.64 an ounce from $17.52/17.61 late in New York. In industry news, Peru's largest federation of mining unions said a nationwide strike has started. Peru is the world's leading silver producer and second-largest copper and zinc miner. The most active Tokyo platinum contract for June 2009 delivery on the Tokyo Commodity Exchange fell 52 yen per gram to 6,913 yen.
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