A stronger US dollar took some shine off gold in Asia on Monday, although expectations that the euro will resume its rise kept bullion trading near 16-year highs. The dollar's modest recovery against the euro and yen trimmed less than $1 off gold, which jumped nearly $6, an ounce late on Friday as the dollar tanked in New York. "We're seeing some backing off as the dollar picks up, but nobody really thinks the dollar's on the way up long term," a bullion dealer said.
Spot gold was quoted at $454.75/$455.50 an ounce versus $455.55/$456.20 late in New York. On Friday's afternoon London fix was $448.65. Gold rallied late on Friday, closing just shy of Thursday's 16-year high, as the market tracked the Europe's jump to a record high against the dollar.
"It's all about the euro right now; that's driving gold," another bullion dealer said. The euro was slightly easier at $1.3445, versus $1.3454 in New York.
The dollar fetched around 102.10 yen, flat from late US levels on Friday.
Nearby technical support could nudge gold toward $460 an ounce, particularly if the dollar again loses ground, making bullion cheaper in other currencies. The gains came amid the dollar's descent to its lowest value ever against the euro and declines of more than 1 percent against other major currencies on Friday.
However, Deutsche Bank cautioned that the dollar could soon place more downward pressure on gold.
"The dangers of a correction in the gold price at the beginning of next year persist, given the US dollar's tendency since 1994 to strengthen more than 70 percent of the time in the first four weeks of a New Year," Deutsche said in a report.
In the Tokyo futures market, the benchmark October gold futures contract was unchanged at 1,499 yen. Silver was down 1 cent against the late New York quote at $7.98/$8.00 an ounce. Platinum was down $1 to $869/$874 an ounce. Palladium was up $2 to $204.00/$209.00 an ounce.
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