Gold up after Portugal rating cut
Singapore, July 6, 2011
Spot gold rose to a 1-1/2-week high on Wednesday, supported by a weaker dollar and renewed worries about the euro zone's debt problem after Moody's slashed Portugal's credit rating to junk.
Moody's also warned that Portugal may need a second round of rescue funds, cutting into risk appetite in financial markets and pushing gold to a 1-1/2-week high of $1,516.49 on Tuesday.
"Portugal was certainly the trigger, and the mood in the financial markets has turned a bit cautious," said a Singapore-based trader. The dollar edged lower against a basket of currencies, as the euro regained some lost ground with short-term players covered short positions ahead of a European Central Bank policy meeting.
Investors were also watching the ongoing strike in Freeport-McMoran's Indonesia mine as well as the threat of a strike in South Africa's main gold mines, which could spur price rally should any serious production disruption occur.
Spot gold rose to $1,518.44, its highest since June 24, before easing to $1,516.94 by 0626 GMT, up $1.24 from the previous close. US gold edged up 0.3 percent to $1,517.50.
The short-term technical picture has turned positive, with spot gold expected to rebound further towards $1,550 per ounce, said Reuters market analyst Wang Tao. Brokerage MF Global expects gold to remain rangebound between $1,490 to $1,550 in July, supported by expectations that global monetary policy will remain supportive even though recent manufacturing data has improved. - Reuters