SINGAPORE: Gold rose more than 1 percent on Wednesday on bargain hunting after a drop in the previous session, but pressure from a firm US dollar, strong equities and daily falls in holdings by exchange-traded funds looks set to cap prices.
Although demand for gold bars, coins, nuggets and other products have surged after prices plunged to their weakest in more than two years, investor confidence is still reeling after bullion's spectacular fall.
US gold for June delivery hit a session high of $1,424.90 an ounce, up more than 1 percent from the previous close and stood at $1,421.60 by 0209 GMT, up $12.80.
Cash gold added $10.07 an ounce to $1,422.31. Spot gold prices sank to around $1,321 on April 16, the lowest in more than two years, in a sell-off that surprised ardent gold investors and bulls.
"While some physical buyers have been flocking to gold in light of lower prices, ETF investors seem to be heading the other way and cutting their exposure," said Edward Meir, metals analyst at futures brokerage INTL FCStone. "Right now, we are seeing a mixed bag in the markets, with the precious group slightly higher, but both metals and energy are off in early trading."
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.68 percent to 1,097.19 tonnes on Tuesday from 1,104.71 tonnes on Monday. The current holdings are at multi-year lows.
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