Gold was stuck in a $1 an ounce range in Asia on Friday, struggling to stay above $410 as dealers became frustrated by the metal's failure to touch a new high and reconsidered their precious metals positions.
"I've certainly seen gold supported on the downside of $408. But I don't know what the source of that is I don't see much of the physical sign," said one precious metal dealer in Sydney.
Spot gold was quoted at $409.00/409.75 an ounce after trading as high as $411.25. That compared with $409.30/410.00 last quoted in New York.
The benchmark December 2004 gold contract on the Tokyo Commodity Exchange (TOCOM) was unchanged at 1,412 yen per gram.
"With gold having failed to make gains this week, we may see the metal come under pressure today as traders who are holding long positions become disillusioned," N M Rothschild said in a report.
"Despite the euro having traded at record levels against the US dollar this week, gold failed to trade above resistance $417, closing below $410 in New York," it said.
Gold hit a 15-year peak of $430.50 an ounce on January 6 as the dollar fell to a lifetime low against the euro. But it failed to repeat the spectacular rise this week even as the euro set a new record high against the US currency.
The euro's failure to retain the upside was seen as an excuse by some investors to trim their gold positions while waiting for more leads from the currency markets.
The dollar stood at $1.2732 to the euro, off a record high of around $1.2930 hit on Wednesday. The dollar was fetching 107.33 yen, well above a three-year low of 105.15 traded this month.
"Looking at the twin deficits in the United States, the dollar's outlook is indeed not good at all," said Koji Fukaya, chief forex analyst at Bank of Tokyo-Mitsubishi.
"But in a three- to four-month time-frame, the dollar may hit bottom as a US interest rate hike is expected in the latter half of this year and fund flows into the yen are likely to fade as foreign investors don't seem to be buying Japanese stocks as much as they were last year," he said.
Some bullion dealers said gold would eventually climb above $417 because of the dollar's overall weak tone.
"Gold is still dictated by movements in the US dollar. If there's a bad news and the US dollar goes down, we will break through that barrier," said the Sydney dealer.
"The dollar is going through a period where it's been relatively strong. But I think we will see the euro start heading towards 1.30, which it could potentially do. I think we will break through that level quite easily," he said. In other precious metals, silver was quoted at $6.67/6/69 an ounce against $6.64/6.66 last quoted in New York.
The metal hit a six-year high of $6.86 an ounce on Wednesday, tracking the surge in copper to around eight-year highs as a result of China's ferocious appetite for metals.
Silver has lost most of the gains due to a lack of liquidity.
Platinum was quoted at $852/857 an ounce and palladium at $238/243 an ounce.
Comments
Comments are closed.