Gold climbed above $900 an ounce on Wednesday on demand for the metal as a safe store of value, but remained rangebound as the markets awaited direction from a raft of financial news due later in the week. Spot gold was quoted at $905.90/907.90 an ounce at 1508 GMT, against $900.40 an ounce in New York late on Tuesday.
US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $14.10 to $906.10 an ounce. The market is awaiting interest rates announcements from European central banks on Thursday and key US jobs data on Friday for new direction, but remains supported by demand for gold as a safe store of value, analysts said.
Dresdner Kleinwort consultant Peter Fertig said while the ECB is unlikely to cut rates, comments made at the press conference after its rate-setting meeting "could surprise". Gold is likely to remain relatively rangebound until there is fresh news, with the precious metal's failure to break above $930 an ounce last week dampening some enthusiasm, traders said.
"It feels like gold will be in a range of $880-930 for the short term," Afshin Nabavi, head of trading at MKS Finance in Geneva, said. "Gold is a natural place for people to turn to in these times, when assets such as mortgage backed securities, that were regarded as ultra safe 18 months ago, have turned out to be anything but," said Evy Hambro, manager of BlackRock's World Gold and World Mining funds.
Demand for gold as a safe store of value has surged recently as other assets have become increasingly volatile. Physical bullion in the form of coins and bars and gold-backed exchange traded funds have proved popular with investors. The world's largest gold-backed ETF, the SPDR Gold Trust, said its holdings held at a record 853.37 tonnes on Tuesday, up more than 9 percent from January 2.
However, demand for gold jewellery in traditionally key global centres such as India and the Middle East has been soft. Traders said gold buying in India, the world's biggest gold market, was slack. One dealer at a state-run bank in Mumbai told Reuters there were "no enquiries" from jewellers. Turkey also stopped importing gold bullion in January, as increasing levels of gold scrap coming back onto the market were enough to meet domestic demand.
Elsewhere, Swiss bank UBS lifted its 2009 average gold price forecast to $1,000 an ounce from a previous price view of $700, citing expected strong safe-haven demand. It said it sees investment demand for the precious metal doubling in 2009 compared with 2007. Among other precious metals, silver climbed to $12.52/12.60 an ounce from $12.40.
However, investment demand for silver remained strong. Holdings of the iShares Silver Trust, the world's largest silver-backed ETF, rose another 77 tonnes to a record on February 3. Platinum was at $967.50/977.50 an ounce from $959.50, while palladium was at $192.50/197.50 an ounce against $191.50.
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