Gold rose on Wednesday, supported by strong investment demand and news that South Africa is to levy royalties on minerals exports, but the metal pared gains after above-consensus US housing data lifted the dollar. Spot gold hit a peak of $1,126.85 an ounce, its highest since January 20, while euro-priced gold rose to a record 820.84 euros an ounce, before fresh gains in the US currency pressured prices from highs.
Spot gold was bid at $1,122.75 an ounce at 1450 GMT, against $1,118.95 late in New York on Tuesday. US gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $2.70 to $1,122.00 an ounce. "We have seen stock markets rising," said Peter Fertig, a consultant at Quantitative Commodity Research. "This indicates that investors are willing to take on more risk."
Pension funds started investing actively in gold last year viewing the metal as a safe long-term investment, the head of the World Gold Council told Reuters.
"Investment demand from the United States and a lack of selling out of Asia are pushing gold up," said Standard Bank analyst Walter de Wet, adding that a fall in net long positions in New York gold futures suggested gold had room to rise.
The World Gold Council said in its hotly-anticipated Gold Demand Trends report for the fourth quarter of 2009 that investment appetite for gold was expected to stay firm, though overall gold demand fell 11 percent in 2009. Global central banks will be net gold buyers in 2010 as they review their reserves policies, the head of the WGC told Reuters on Wednesday.
India remained the world's number one gold consumer, it said, with fourth-quarter consumption rising 13 percent to 180.7 tonnes year-on-year as wedding and festive demand peaked. India's gold imports for 2010 may rebound to 550 tonnes as prices steady and the economy revives, a senior official at a trade body told Reuters on Wednesday.
On the supply side, South Africa said in its 2010 Budget Review on Wednesday that it will from March 1 this year levy mining royalties that were postponed due a recession last year. South Africa is the second-largest gold producer. Among other precious metals, silver was at $16.20 an ounce against $16.12, platinum at $1,542 an ounce versus $1,118.95, and palladium at $437.50 versus $430.50.