Gold steady before EU summit; physicals resilient
Investors grew confident after a weekend European Union summit made some progress towards an agreement on how to contain the debt crisis, even though the final decision was deferred to a second summit on Wednesday.
"The market is very quiet as everyone is waiting for the European solution tomorrow," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong, adding that a disappointing outcome could trigger a sell-off in gold and other assets.
He cautioned that even if Wednesday's meeting produced a comprehensive plan, Europe will not be out of the woods any time soon due to the size of the crisis.
Spot gold edged up 0.2 percent to $1,655.10 an ounce by 0604 GMT, after rising 2 percent over the past two sessions.
US gold traded up 0.3 percent to $1,656.50.
Technical analysis suggests that spot gold will retrace to $1,635 per ounce after it failed to break a resistance at $1,659, Reuters market analyst Wang Tao said.
There is no bubble in gold prices and the global economic uncertainty could easily push gold higher, said the chief executive of AngloGold Ashanti , the world's No.3 gold producer.
PHYSICAL DEMAND RESILIENT
Physical buying has subsided from a rush at the end of September when prices sank well below $1,600, but seasonal demand remained resilient in Asia.
India is to celebrate Diwali, an important Hindu festival on Wednesday. Gold buying in the top consumer of the precious metal rises in the last three months of the year, a traditional time for festivals and weddings.
Gold premiums in Hong Kong held steady around $2 an ounce above spot prices, and in Singapore around $1.5, dealers said.
"We still don't have spare stocks and clients need to pre-book orders," said a Singapore-based dealer, expecting demand to remain strong due to India's ongoing festival season and robust demand elsewhere.
Buying interest from Thailand has slowed, as the worst flooding in 50 years in the country disrupted businesses and affected lives of millions, she added.
Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, gained about half a percent to 1,233.564 tonnes by Oct. 24, after standing unchanged throughout last week.
China's imports of platinum group metals jumped in September. Palladium imports climbed 22 percent on the year to 2,637 kilograms, while platinum imports soared 138 percent from a year earlier to 7,832 kgs, official trade data showed.
Spot palladium hit $645.50, its highest in nearly a month, before easing to $638.40, up 0.4 percent from the previous close.
Copyright Reuters, 2011