SINGAPORE: Gold edged higher on Wednesday, but traded below the one-month high hit in the previous session on an improved global economic outlook, while investors shifted focus once again to the troubles of the euro zone.
Gold rallied with riskier assets on Tuesday as data from China, Germany and the United States soothed anxiety over the global economy and fueled bets on equities, commodities and the euro.
Though markets held steady, the euro zone debt crisis remains a major concern, with Greece resuming talks over a debt swap deal with its creditor banks and Portugal testing investor appetite with a debt auction on Wednesday.
"There's considerable anxiety over Greece," said Nick Trevethan, senior commodity strategist at ANZ in Singapore. "Together with the looming Chinese holiday, you've probably got a recipe for risk reduction."
Some market participants are likely to close their positions and lock in profit before heading out for China's week-long Lunar New Year holiday next week.
Spot gold edged up 0.2 percent to $1,654.89 an ounce by 0706 GMT, extending gains into a third consecutive session. It hit a one-month high of $1,667.41 on Tuesday.
US gold was flat at $1,655.60.
Technical analysis suggested that spot gold could decline to $1,625.20 an ounce during the day, Reuters market analyst Wang Tao said.
India on Tuesday raised its import duty on gold by 90 percent and doubled the tax on silver, but the measure is unlikely to make a significant impact on gold demand from the world's top gold consumer, traders and analysts said.
Physical dealers in Singapore said Tuesday's price spike attracted some selling, but it faded quickly as prices eased.
"We see some light buying as prices fall to the $1,640 level," said a Singapore-based dealer, adding that clients made orders for after the Lunar New Year.
Metals consultancy GFMS expected gold to break above $2,000 in late 2012 or early 2013, but said gold could be near the end of a decade-long bull run.
A few banks have recently lowered price forecasts for gold, including ANZ, Standard Bank and Credit Suisse.
Comments
Comments are closed for this article.