Buying interest from investors and jewellers helped gold defy a stronger dollar in Asia on Monday, but the yellow metal lacked impetus to rise much higher after it failed to breach key resistance. Spot gold was at $425.15/425.65 an ounce by 0427 GMT, versus $424.50/425.30 an ounce last quoted in New York on Friday and off a morning high at $425.40 in Asia.
Gold rose to its highest level in nine days at $426.90 on Friday - not far from a key resistance of $428 - after the euro firmed against the dollar following China's revaluation of the yuan.
But euro's failure to sustain that rise plus profit-taking erased some of gold's gains. The single currency was at $1.2054, slightly lower than New York levels.
"I think there's some nice demand on the physical side. A strong copper price, which supports other base metals also helps," said one dealer in Hong Kong.
"That's why, even though the euro is a bit under pressure, gold is pretty stable," he said.
Dealers expected gold to trade in a $421 to $428 range this week and were watching the currency markets for direction.
Tokyo gold futures rose after the yen gave up gains against the dollar, but Japanese investors were careful about buying too much. The benchmark June contract on the Tokyo Commodity Exchange added four yen per gram at 1,529 yen.
Dealers say the yen remains under pressure as Prime Minister Junichiro Koizumi could call a snap election due to ruling party strife over a bill to reform the postal system.
Prospects of the US Federal Reserve raising its 3.25 percent target for overnight funds by a quarter point in early August, compared with virtually zero rates in Japan, have also tempered appetite for the yen.
"If Koizumi dissolves the cabinet, there will be chaos," said one Tokyo dealer. "That's why people are waiting for the decision. There's not much activity in the gold market either because of the summer holidays," he added.
The yen, which has often been bought as a proxy bet on an appreciation in the yuan and Asian currencies, has given up more than half the sharp gains made since China said on Thursday it would switch the decade-old dollar peg to a currency basket.
In other precious metals, silver rose to $7.11/7.13 an ounce, versus $7.06/7.09 in the US market, due to strong base metals prices, especially copper.
Because of its industrial use, silver often tracks base metals prices.
Platinum was at $885/890 an ounce, versus $887/890.
Palladium was at $191/196 an ounce, compared with $193/196 in New York.
Comments
Comments are closed.