Gold prices steadied in Europe on Tuesday in holiday-thinned trade, but fresh strength in the euro and buoyant interest in the metal as a haven amid fears of further borrowing strains in the eurozone lent firm support. Tensions ran high after ratings agency Moody's said it had put Portugal on review for a possible downgrade. This pulled gold from highs as it brought the euro under some pressure, though the single currency remained higher on the day.
Spot gold was bid at $1,385.80 an ounce at 1619 GMT, against $1,384.90 late in New York on Monday. US gold futures for February delivery were flat at $1,386.50. "On one hand, definitely the weaker dollar and stronger sentiment towards commodities are helping gold," said Commerzbank analyst Eugen Weinberg. "On the other hand, some may prefer to take profits just before the year end." "It's more about the technical picture," he added. "People are not very convinced about the performance short-term.
Moody's downgraded Irish debt on Friday and said on Monday it may cut the ratings on Spanish banks. Gold has risen by about a quarter so far this year, driven largely by concerns over eurozone debt levels, which have allowed the metal to ride out hefty losses in the euro this year. Relative dollar strength would usually be a negative factor for gold.
"We are still in narrow trading but eurozone fears are creeping back into the investor agenda," said Andrey Kryuchenkov, an analyst at VTB Capital. "The latest surge in ETFs and some risk aversion have been supportive lately." Investor demand for gold has been firmer this month, with holdings of the world's largest gold exchange-traded fund, the SPDR Gold Trust, rising by just over 12 tonnes since the end of November.
Jewellery consumption by major buyers in India and elsewhere in Asia was soft, however. "People are waiting for Christmas and New Year," said one dealer in Singapore. "Towards the year-end, there are not many orders from jewellers." Among other precious metals, silver was bid at $29.22 an ounce against $29.33. Platinum was at $1,714.65 an ounce versus $1,692 and palladium at $746.83 versus $740.
Switzerland, one of the leading clearers of platinum group metals in Europe, imported 3,772 kg of platinum and 1,765 kg of palladium in November, data from the Swiss Federal Customs office showed on Tuesday. China also released precious metals trade data on Tuesday.
"China November trade statistics released this morning show a sizeable spike in platinum imports," said UBS in a note. "The origin of the metal is not entirely clear. The usual suspects - South Africa, Japan, Switzerland and Russia - are cited, but 3.25 tonnes of the total came from 'country or region unknown'." "The lack of country origin, something we haven't seen in the data before, could mean that the metal is non-good deliverable, but the country or region of origin reflects where the metal has been shipped in from rather than where the metal was originally refined."