SINGAPORE: Gold steadied on Tuesday, after rising to its strongest in more than a month in the previous session as fears about a slowing U.S. economy prompted purchases from investors seeking an alternative investment.
Gold was steady at $1,543.09 an ounce after rising as high as $1,553.30 on Monday, with investors awaiting a speech by Federal Reserve Chairman Ben Bernanke on the U.S. economic outlook later in the day.
Gold is still well below a lifetime high around $1,575 touched in early May, but with the U.S. dollar under pressure, the equities markets falling and the debt crisis in Europe far from over, bullion with its safe-haven status continues to be one of the chief beneficiaries.
"I think the odds are stacked in favour of gold at the moment," said Darren Heathcote, head of trading at Investec Australia in Sydney.
"I guess the other thing to watch is what happens if we're getting more rhetoric from the various ministers and powers within Europe about the Greece situation etcetera. I think the market is still extremely weary of what the potential outcome may be."
Greek Prime Minister George Papandreou told his cabinet on Monday it was crucial to accept years of austerity to secure a new international bailout, a challenge for a nation already seething over corruption.
Silver, which normally tracks gold, hardly moved at $36.58 an ounce, below a record at $49.51 an ounce hit in April.
Gold prices, which have gained for the last three straight weeks, have been supported by the recent soft patch of data from the United States.
Federal Reserve officials said recent economic data has been disappointing, with one suggesting it could delay the Fed's exit from its extremely easy monetary policy.
The Federal Reserve has kept interest rates near zero for two-and-half years and this month completes a $600 billion round of Treasury securities purchases designed to boost an economy still recovering from its worst recession since the 1930s.
The euro inched up on Tuesday, steadying from a slide after the Eurogroup chairman said the common currency was overvalued, while Asian stocks eased as a trail of weak U.S. economic data pointed to slowing growth.
The physical market lacked activity, with jewellers and speculators on the sidelines following a rise in gold prices.
"It does look like there's a tough resistance at $1,553 an ounce or above. There isn't much activity and consumers in Thailand are also quiet," said a physical dealer in Singapore.
"I guess everyone is hoping to sell at higher levels, but physical gold is not moving very much anywhere."
India's gold futures rose Monday chasing gains in the overseas markets, while demand in domestic spot market improved despite price rise as jewellers, who were waiting for a correction, made significant purchases.
Holdings of the largest silver-backed exchange-traded-fund (ETF), New York's iShares Silver Trust and the largest gold-backed ETF New York's SPDR Gold Trust remained unchanged from Friday to Monday.
Copyright Reuters, 2011