Thursday 26 November 2015

Gold inches up as buyers trickle back

Singapore, March 2, 2012

Gold edged higher on Friday as buyers slowly returned to the market, lured by Wednesday's plunge of 5 percent, although bullion is still looking at its worst week since December.

US Federal Reserve Chairman Ben Bernanke's lack of a reference to further quantitative easing at congressional testimony on Wednesday sparked a heavy sell-off in bullion, sending the metal to a one-month low short of $1,700.

Gold's fall to the lower end of its previous range showed the lack of conviction required to push prices above $1,800 or higher, but analysts and traders saw Wednesday's plunge as a healthy correction rather than the end of the bull run.

"The broader macro backdrop remains gold-favourable, given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties," Barclays Capital said in a research note. But it added dollar strength, broad risk reduction and profit-taking could pose near-term hurdles for gold.

Spot gold inched up 0.2 percent to $1,720.09 an ounce by 0334 GMT, on course for a weekly decline of 3.4 percent, its biggest one-week fall since mid-December. US gold was little changed at $1,721.50.

Technical analysis suggested that spot gold could face resistance at $1,726 during the day, said Reuters market analyst Wang Tao. Holdings in gold-backed exchange-traded funds gained 238,674 ounces to a record high of 70.76 million ounces, suggesting investors remained keen on gold.

The gold-platinum spread fell to just above $16 an ounce, its lowest since mid-September, as supply disruption in South Africa remains a concern, and upbeat US auto sales data helped.

Spot platinum gained half a percent to $35.30 an ounce, headed for a loss of 0.2 percent over the week. The metal, mainly used to produce jewellery and autocatalysts, has risen 22 percent so far this year, compared to a gain of 10 percent in gold. 
"I'm of the opinion that gold's premium over platinum should be corrected in due time, but I didn't expect it to come so quickly," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank.

The focus remains on Impala Platinum, the world's second-largest platinum producer, which has suffered 100,000 ounces of lost production in a six-week-long strike at its key Rustenburg mine. The company said it would restart production on March 5. - Reuters

Tags: Gold | bullion | metal |


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