Gold hit a three-week high on Wednesday, boosted by concern over the debt crisis in eurozone countries such as Greece and a softer dollar after weak US economic data which also helped shore up prices. Spot gold hit $1,528.90 a troy ounce, its highest since May 4. It was bid at $1,528.40 an ounce at 1355 GMT from $1,525.75 an ounce late in New York on Tuesday.
Euro-priced gold hit a record 1,087.84 euros an ounce, according to Reuters data. Gold priced in sterling was at 942.60 pounds per ounce, near a lifetime high of 944.87 struck on Tuesday. Escalating worries about Greece's finances and potential contagion effects on other countries including Portugal and Ireland triggered a flurry of investor buying. The eurozone debt crisis has also weighed on the euro against the dollar. "It's balancing debt problems against the impact it's having on the euro versus the dollar," said Daniel Major, analyst at RBS. "Underlying physical demand in Asia is relatively resilient."
A yardstick for investor interest are holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust, which rose 0.38 percent to above 39 million ounces on Tuesday from Monday. "Fresh inflows into gold ETFs following sizeable outflows in recent weeks hint at rising investor interest," Credit Suisse Private Banking said in a note. "Low real yields should prove additionally supportive." Investors are more inclined to hold gold when interest rates are low as there is little or no opportunity cost for owning the precious metal, which does not earn any interest or dividends.
However, holdings of the largest silver-backed ETF, New York's iShares Silver Trust, dropped 0.51 percent to 324.253 million ounces on Tuesday from Monday. Spot silver saw $37.48 an ounce, its highest since May 11. It was last at $37.45 an ounce from $36.53 late on Tuesday. The industrial precious metal is down 35 percent since touching a record peak of $49.51 an ounce on April 28. "We think silver's prospects are less positive given the fundamental overvaluation and the market's heavy dependence on investor appetite," Credit Suisse said.
Both platinum and palladium are used to make autocatalysts. Auto sales are expected to rise this year. Most analysts expect double-digit growth in 2011. Spot platinum was bid at $1,775.24 an ounce from $1,761.55 on Tuesday, palladium at $742.47 from $732.53. Earlier palladium saw a 3-week high of $744.00 an ounce.
Comments
Comments are closed for this article.