Gold held near $1,710 an ounce on Monday as concerns over the global growth outlook supported demand for the metal as a store of value, but losses in the broader financial markets kept up some pressure on prices. Resilience above $1,700 an ounce, a level gold repeatedly tested last week, has reassured buyers who had feared a deeper correction after it fell to a more than six-week low at $1,698.39 on October 24, analysts said.
Spot gold was down 0.1 percent at $1,708.96 an ounce at 1537 GMT, while US gold futures for December delivery were down $2.40 an ounce at $1,709.50. It is settling into a range after running into support last week, traders said. "I don't think we'll break too far out from $1,700 or $1,715," the Bank of Nova Scotia's head of precious metals Simon Weeks said. "There's good physical interest on the dips." Spot gold is heading for its biggest monthly loss since May, having hit an 11-month peak above $1,795 an ounce on October 5 after the Federal Reserve unveiled its latest stimulus programme of purchasing mortgage-backed debt.
Analysts and traders said they expected gold to trade in a narrow range due to uncertainty ahead of non-farm payrolls data later in the week. The Fed has explicitly tied the extent of its new easing programme to the jobs market. Though it remained firmly underpinned, gold struggled for traction on Monday as global stock and commodity prices fell, with a recent run of downbeat corporate earnings casting a shadow over the growth outlook and investors bracing for the impact of a giant US hurricane. US stock markets will be closed on Monday and possibly Tuesday, the operator of the New York Stock Exchange said, as the East Coast braces for Hurricane Sandy. That could thin gold trade.
Hedge funds and money managers cut their bullish bets in gold and silver futures in the week to October 23 amid fresh concerns over the future of the US Federal Reserve's monetary stimulus. Further out, investors are also awaiting the US elections and the so-called "fiscal cliff", a series of automatic spending cuts and tax increases that will kick in if Congress fails to reach a deficit-reduction deal by the end of the year. "We are unlikely to see any significant moves in gold until we are closer to knowing what will happen with the US fiscal cliff," said Nic Brown, head of commodities research at Natixis.
On the physical side of the markets, gold importers in India, the world's biggest buyer, are retreating after picking up bargains last week as prices recovered from a more than two-month low due to the falling rupee. The weakening rupee was seen as dampening Indian gold physical demand in the run-up to the festival season, which will peak with Diwali and Dhanteras next month. The rupee, which fell past the keenly watched 54 rupees per dollar mark on Monday, plays an important role in determining the local cost of dollar-quoted gold.
From a technical perspective, analysts who study past price patterns for clues on the next direction of trade flag up support at $1,703 an ounce. Platinum prices eased after weekend news that Anglo American Platinum had reached a deal to reinstate 12,000 miners sacked for an illegal strike, and due to long liquidation. "The market was caught a bit long and we are now seeing more liquidation going through," Afshin Nabavi, heads of trading at MKS Finance, said.
"I would attribute the drop to the South African news and the market being too long," he added, referring to the Amplats deal. Spot platinum was down 0.5 percent at $1,531.25 an ounce, silver was down 0.8 percent at $31.80 an ounce, and palladium was down 0.5 percent at $589.50 an ounce.
Comments
Comments are closed.