Gold rose above $1,070 an ounce on Tuesday as the dollar fell versus the euro amid speculation a rescue plan for struggling Greece may be arranged soon, enhancing the precious metal's appeal as an alternative asset. Spot gold hit a session high of $1,079.05 an ounce and was bid at $1,073.75 an ounce at 1625 GMT, against $1,062.80 late in New York on Monday. Late last week it fell to a three-month low at $1,043.75 as the euro tumbled.
"The market is looking for upside potential on euro-dollar given the record short positions in the euro," said Saxo Bank senior manager Ole Hansen. "Gold... is in a much stronger position after the wash out on Friday." US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $8.10 to $1,073.80 an ounce. The euro extended gains versus the dollar on Tuesday as investors covered short positions on market speculation that some form of bailout will soon be organised for Greece.
News that European Central Bank President Jean-Claude Trichet was leaving a meeting of central bankers in Sydney early to attend a European Council meeting on February 11 prompted speculation a plan was being discussed.
If these issues are successfully addressed, it is likely to provide a fillip to the euro, and consequently to gold. "The issue of sovereign risk, which is currently working in the dollar's favour and against the euro and therefore gold, could come back to haunt the dollar," HSBC said in a note. A Reuters poll on Tuesday found only a one in four chance that Greece may have to seek a bailout this year to put its public finances back on track. China Investment Corp, the Asian giant's $300 billion sovereign wealth fund, said it had invested $155.6 million in the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust.
The trust's holdings were unchanged on Monday after reporting their first inflow of 2010 after spot prices fell sharply on Friday. Gold ETFs issue securities backed by physical stocks of bullion, giving the investor exposure to the underlying gold price without taking delivery of the commodity itself. Among other precious metals, silver was at $15.23 an ounce against $14.98, tracking gold higher. Platinum was at $1,492 an ounce against $1,472, while palladium was at $412.50 against $404.
Comments
Comments are closed.