LONDON: Gold prices steadied below $1,690 an ounce on Tuesday as the euro surrendered gains against the dollar and European stocks languished, with buyers frustrated by the metal's inability to break through resistance at $1,695 an ounce.
While the precious metal took support in early trade from weakness in the dollar versus the euro after a positive reading of German investor sentiment, it struggled to breach its 55-day moving average at $1,694 an ounce.
Spot gold was at $1,689.79 an ounce at 1318 GMT, little changed from $1,689.55 late on Monday, while US gold futures for December delivery were up $3.30 an ounce at $1,690.30.
"We're still trading in very thin volumes, hence the trade remains very technical, with very little investor or physical interest at the moment," Andrey Kryuchnkov, an analyst at VTB Capital, said.
A sustained close above $1,690-1,700 would be necessary to reignite interest in the metal, he said. "Given (a lack of) macro events, we don't expect overwhelming interest, and we should see some kind of small-scale pullback to take a breather if the market fails to close above $1,690 today."
Gold prices are little changed from the start of the year after posting their worst quarterly performance in more than four years in the last three months of 2012. Gold stalled below $1,700 an ounce in early January and has struggled to break through resistance at $1,690-1,695 in the last four sessions.
In earlier trade the metal also took some support from the Bank of Japan's announcement that from 2014 it would adopt an open-ended commitment to buy assets.
Tokyo's benchmark gold futures contract rose to a record high of 4,913 yen per gramme. While the direct impact of the move on international prices is likely to be minimal, further easing is likely to be broadly gold-supportive, analysts said.
"At the international level, it's another expansionary element to add to the US' and EU's actions; not an earth-mover, I wouldn't have thought, though, as Japan's been flirting with deflation for ages," GFMS analyst Rhona O'Connell told the Reuters Global Gold Forum earlier.
"It may well sustain market uncertainty over currencies and possible inflation for longer than anyone had been expecting up to now," she said.
INDIA HIKES MORE DUTIES
On the physical side of the market, India more than doubled the import duty on gold dore bars and ores on Tuesday, hard on the heels of a hike in taxes on refined gold. Dore, an alloy of gold and silver used by refineries, accounts for about 100 tonnes or about 12 percent of India's annual imports.
The government is trying to dampen demand in the world's biggest bullion consumer, whose imports total around 800 tonnes a year, and rein in a record current account deficit. On Monday it lifted import duty on refined gold by two points to 6 percent.
"Over the medium term, we think the duty increase may dampen import demand only moderately: we estimate about a further -10 percent on top of the reduction already seen in 2012, all else being equal," Credit Suisse said in a note late on Monday.
"The strength of the rupee, the absolute level of domestic prices, and the overall health of the Indian economy will continue to be a greater determinant of gold demand, in our view," it said.
Among other precious metals, silver was down 0.3 percent at $31.88 an ounce. The world's largest primary silver producer, Mexico's Fresnillo, said attributable silver production would come in at 41 million ounces this year, matching production achieved in 2012.
Spot platinum was up 0.3 percent at $1,677.99 an ounce, while spot palladium was up 0.1 percent at $716 an ounce. The platinum group metals have eased after touching multi-month highs last week on the back of output cuts in South Africa and hopes for an improvement in demand.
Miners in the republic have struggled in recent years as lower platinum prices failed to keep pace with rising costs. Major producer Anglo American Platinum announced an operational overhaul last week that may cost 14,000 jobs and 400,000 ounces of lost production.
*
Comments
Comments are closed.