Gold climbed around 1 percent in thin trade on Monday as the dollar lost ground against the euro, but oil's fall capped the gains, traders and analysts said. Trading volume was light, traders said, with many market players leaving for the Christmas holiday.
Spot gold was fetching $845.70 an ounce at 1613 GMT versus $837.60 an ounce late in New York on Friday, when it dropped nearly 3 percent. "The dollar's definitely helping gold," said analyst Eugen Weinberg at Commerzbank in Germany. The euro added 0.5 percent to $1.3994 after earlier hitting a session peak of $1.4123 in holiday-thinned trade.
Bullion, which touched a two-month high of $881.20 an ounce last week, tends to move in opposite direction with the dollar as a weaker US currency makes it cheaper for local currency holders. "Also the demand from investors looking for safe haven is very strong since last week, so the prices are responding," Weinberg said.
Switzerland's Zurich Cantonal Bank (ZKB) said gold investment in its exchange-traded fund rose to 3.128 million ounces in the week ending December 19, compared to 3.082 million ounces in the previous week. But as the outlook for world economy deteriorates analysts saw little room for gold to rally higher.
More gloomy news on the global economy is expected this week - starting with revised US third-quarter GDP on Tuesday and November US personal spending on Wednesday - pointing to a long recession ahead that could bolster bullion buying.
"It looks likely that most commodity prices will be under pressure generally in the next few weeks and I can't see gold rallying from already high levels," said Jesper Dannesboe, senior commodity strategist at Societe Generale. China, the world's top consumer for many commodities, cut banks' benchmark lending and deposit rates again, the fifth cut since mid-September.
Oil fell below $42 a barrel after rising above $43 a barrel earlier in the day. "Crude was up earlier, now under pressure - which is not good for gold," a London-based gold trader said. Spot platinum was at $856.00 an ounce versus $847.00 an ounce while spot palladium was slightly lower at $173.50 an ounce from $173.00 and silver climbed to $10.81 an ounce from $10.81.
Russia, a major supplier of platinum group metals (PGMs) used in industries ranging from car-making to jewellery, may face delays in exports next year due to red tape, the former monopoly export agency said.
Comments
Comments are closed.