SINGAPORE: Gold traded little changed on Wednesday with many investors moving to the sidelines ahead of a key European Union summit this week where policymakers are expected to find a way to end the region's two-year-old debt crisis.
Investors were also cautious after ratings agency Standard & Poor's fired a second warning shot at the euro zone in 24 hours, threatening to cut the credit rating of its financial rescue fund as European leaders raced to find a political solution to their sovereign debt crisis.
Gold's safe-haven appeal has been tarnished, and the precious metal has been tracking riskier assets as the turmoil in financial markets has tightened funding and forced investors to close profitable gold positions to cover losses elsewhere.
Gold took cues from the currency market. The euro recovered from a dip to one-week lows and the dollar index traded steady, as investors await the EU summit and a rate decision by the European Central Bank on Thursday.
Asia's bullion market remained muted, dealers said.
"No one wants to hold stockpiles ahead of the year end and the market is extremely quiet," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
"Physical demand may pick up at the end of the month or early January, as jewellers prepare for the Lunar New Year."
Premiums on gold bars in Hong Kong were steady in the range of 50 cents to $1.50 an ounce above spot prices, dealers said.
Spot gold edged up 0.1 percent to $1,729.49 an ounce by 0330 GMT. US gold also inched up 0.1 percent to $1,733.80.
"Everyone is waiting for the results from the many meetings in Europe this week," said Peter Fung, head of dealing at Wing Fung Precious Metals. "Prices are likely to remain in the range of $1,710 to $1,750 for now."
Household spending and exports kept the euro zone's economy alive in the third quarter, the EU said on Tuesday, but collapsing confidence points to a recession and probably gives the ECB ground for another interest rate cut.
Spot platinum gained 0.6 percent to $1,528.49, bouncing from a 1-1/2-month low of $1,494.35 hit in the previous session.
The gold-platinum spread widened to $204 an ounce on Tuesday, its widest since Reuters started recording prices in 1985.
Platinum has been at a discount to gold for the past three months -- the longest period since 1985, as the metal, mainly used in jewellery and autocatalysts, lost its attraction during the global economic downturn.
Comments
Comments are closed.