A weaker dollar against the euro sent US gold futures higher early on Wednesday after the previous session's decline, but reduced physical buying from India could hinder the precious metal's upside, analysts said.
At 10:11 am EDT (1411 GMT), most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange was up $2.70 at $662.60 an ounce, moving between $657.50 and $664.20.
"Basically, we are following the euro tick to tick for the gold," one New York trader said from the COMEX floor. The dollar fell after minutes from a Bank of England policy meeting and strong data on eurozone industrial orders suggested interest rates in Europe could rise more than previously thought. Analysts said the start of the monsoon season in top bullion consumer India could lower jewellery demand and hurt gold prices.
"With an imminent slowing of Indian physical demand expected, it will be interesting to see whether the market can hold onto the current levels," John Reade, head of precious metals strategy at UBS, said in a note. Spot gold was quoted at $661.50/3.00, versus $658.80/9.30 late Tuesday. The London afternoon gold fix was set at $662.05.
Greg Wilkins, chief executive of Barrick Gold Corp, the world's No 1 gold producer, said he expected the gold mining industry would be challenged to maintain the current production level, and miners would need higher metal prices to justify their capital investments.
Wilkins told the Reuters Global Mining and Steel Summit in New York that a lower gold supply and strong jewellery demand will continue to support higher prices of bullion. Silver climbed early after it closed below $13 an ounce on Tuesday. COMEX July silver was up 11.00 cents at $13.100 an ounce, trading from $12.955 to $13.160.
Spot silver was quoted at $13.02/3.06, up from $12.92/2.96 on Tuesday in New York. In London, silver was fixed at $13.07. July platinum was up $7.30 at $1,306.00 an ounce. Spot platinum was quoted at $1,298.00/1,303.00. June palladium fell $2.85 to $375.70 an ounce. Spot palladium fetched $373.00/377.00.