Gold swings back above $1,600
London, December 19, 2011
Gold prices swung back above $1,600 an ounce on Monday, erasing earlier losses, as the dollar surrendered gains to trade little changed against the euro in mid-afternoon trade, taking selling pressure off the precious metal.
Spot gold was up 0.3 percent at $1,602.79 an ounce at 1345 GMT. Earlier it fell as low as $1,582.84 an ounce as worries over further euro zone downgrades lifted the dollar.
The metal has seen good physical buying since falling to a near 12-week low last week, dealers in Europe said. It went on to post its biggest one-week loss since late September as the dollar benefited from concerns over the euro zone debt crisis.
'We are just seeing a small pop higher in the euro versus the dollar,' said Saxo Bank senior manager Ole Hansen. 'Liquidity is gone, so it doesn't take much to push (gold) higher.'
He said a move back above the precious metal's 200-day moving average around $1,620 an ounce could trigger more buying.
'I think gold investors could be lurking in the wings if we get a good move back above (there),' Hansen said. 'The break last week has kept the market under some pressure but with no follow-through it could set the stage for some technical short covering which would trigger additional buying from investors.'
The euro recovered to trade almost flat versus the dollar after earlier easing towards an 11-month low on concerns the euro zone sovereign debt crisis would hurt global growth.
Gold in recent months has been closely correlated to riskier assets as a funding squeeze forced investors to dump gold to cover losses elsewhere. - Reuters