Spot gold edged higher on Monday as healthy physical demand helped buoy prices, while China's move to further tighten its monetary policy and upbeat US economic data weighed on sentiment. China raised cash reserve requirements for banks on Friday, as the country's inflation soared to a 28-month high in November and put pressure on the government to step up efforts to curb inflation.
"There's the possibility that China would tighten its monetary policy further," said Ong Yi Ling, an analyst at Philip Futures. "It could affect demand for commodities, and gold could be caught in a sell-off." Spot gold gained by 0.3 percent to $1,387.25 an ounce by 0616 GMT, after falling by 2.2 percent last week. US gold futures edged up 0.2 percent to $1,388.2 an ounce. Spot gold is biased to fall even though it is rangebound between $1,371 to $1,395 per ounce, said Wang Tao, a Reuters market analyst.
"The physical market is very good. Bullion traders and some jewellers are buying, as well as some individual customers who prefer to sell currency and buy gold," said Peter Fung, head of dealing department at Wing Fung Precious Metals in Hong Kong. India and China have both shown strong appetite, due to seasonal rise in demand, he added. Investors are eyeing a Federal Reserve meeting on Tuesday to see whether the proposed $600 billion stimulus plan would be carried out, or if further stimulus would be considered to jump-start the economy. Spot platinum rose 1.3 percent to $1,686.74 an ounce, and palladium gained 1.4 percent to $738.22.
Comments
Comments are closed.