Gold edged up on Thursday on light follow-through buying after gains this week, with precious metals in general supported by lingering security concerns and strength in energy prices. Japanese gold futures advanced, but traders were reluctant to take large new positions ahead of monetary policy meetings by the Bank of England and the European Central Bank.
"People don't want to trade heavily ahead of the ECB meeting and US payroll data. Gold will stay range bound until we confirm the outcome of these events," said Tatsuo Kageyama, analyst at Kanetsu Asset Management.
As of 0706 GMT, spot gold was at $655.50/656.30 an ounce, slightly up from $654.40/655.20 in late European trade on Wednesday. Spot gold moved in a tight band of $654.15 to $655.75. Activity was thin, with US markets closed the previous day for the Independence Day holiday.
Kageyama said the dollar's slight falls against European currencies, stability in US Treasury yields and strength in share prices were all positive for gold. "There are a lot of bullish factors, but gold needs to break through $665 to say that sentiment has reversed completely to bullish," Kageyama said.
Cash gold will face some resistance at the 100-day moving average of around $664. Gold was last above $665 on June 7 before it fell to a three-month low of $638.90 last week. Traders said end-users were still keen to buy physical gold at below $650.
"I think it would be tough to sell heavily below $650 as we've seen a lot of interest from end-users," said Hiroyuki Kikukawa, associate director at Nihon Unicom Inc. Benchmark Tokyo Commodity Exchange gold futures for June 2008 delivery closed at a session high of 2,618 yen a gram, up 14 yen or 0.5 percent from Wednesday's close. Solid oil prices and a weaker dollar supported gold and other precious metals. A weaker dollar makes gold cheaper for holders of other currencies and lifts bullion demand. The metal is also often seen as a hedge against oil-led inflation.
Crude oil held steady around $73 a barrel after briefly marking a new 10-month high on Thursday, as dealers waited for weekly US oil inventory data. London Brent crude, currently seen as more representative of global oil prices, eased 5 cents to $73.00 a barrel, after having traded as high as $73.32, the highest front-month price since late August. Platinum rose to $1,286/1,290 an ounce from $1,282.50/1,286 in Europe, reflecting the strength in TOCOM futures prices. June TOCOM platinum closed up 0.5 percent from Wednesday.
Comments
Comments are closed for this article.