Gold prices slipped on Wednesday as the firmer dollar against the euro dented interest in the precious metal as a currency hedge, but rising oil prices were underpinning the precious metal. Spot gold was at $813.90/ 815.90 an ounce at 1520 GMT, up from a low of $808.50 but down from $819.85 an ounce late in New York on Tuesday.
"This is still a small, volatile market," said Commerzbank senior trader Michael Kempinski. "(Gold) should find good support at $750, with an upside target of $850/875. "There is a strong link to forex at the moment," he added. The dollar, the main external driver of gold, firmed against the euro in early trade as dealers were pessimistic a stimulus package unveiled by the European Commission would be enough to balance the financial crisis.
Renewed risk aversion after weaker-than-expected durable goods data from the US boosted the dollar further, as investors sought a safe haven for funds. Investors were also turning their attention to the outlook for physical gold demand from jewellers as the festive season gets underway.
Gold demand India, in the world's biggest bullion market, remained lacklustre as prices stayed high, dealers said, while analysts said the impact of the credit crunch on consumer spending could keep gold sales low elsewhere. "Seasonally there is demand for the Christmas and New Year celebrations, although in light of the global economic slowdown we would expect jewellery sales to be more subdued this time," Fairfax analyst John Meyer said.
Among other precious metals, spot silver was at $10.38/10.46 an ounce against $10.29. Spot platinum was little changed at $856/876 an ounce from $860 late in New York on Tuesday. Sister metal palladium fell to $189.50/197.50 an ounce against $194.50. Both metals have slipped dramatically from the highs they hit earlier in the year, pressured by concern over the dire outlook for carmakers, the major consumer of the metals, which are used in catalytic converters.