Gold firms on soft dollar, US fiscal talks eyed
Gold gained on Monday after dropping by 1 percent last week as the dollar came off the previous session's highs, while rising tension in the Middle East and continued US discussions to resolve fiscal difficulties lent support.
November 19, 2012 / 15:31 IST
Gold gained on Monday after dropping by 1 percent last week as the dollar came off the previous session's highs, while rising tension in the Middle East and continued US discussions to resolve fiscal difficulties lent support.
Hope that US politicians would find common ground to steer clear of the fiscal cliff boosted Asian shares on Monday. The dollar index eased from a two-month high hit on Friday, making commodities priced in the greenback more affordable for buyers holding other currencies."The dollar is losing momentum for a further rally after Friday's positive news on the fiscal talks, which will support gold," said Li Ning, an analyst at Shanghai CIFCO Futures.The discussions between the two parties are unlikely go smoothly, which would potentially benefit gold, a traditional safe haven favoured by investors during political and economic uncertainty, she said.While last week's report from the World Gold Council painted a lacklustre picture of global gold consumption, investment will continue to underpin prices, Li added.Spot gold rose 0.6 percent to USD 1,723.10 an ounce by 0735 GMT. US gold gained half a percent to USD 1,723.10."If we go through the resistance at USD 1,726, we should see some short-covering and again test the 50-moving average this week," said a Singapore-based trader. The 50-day moving average stood at USD 1,741.Reuters market analyst Wang Tao expected spot gold to rise to a resistance zone of USD 1,734-1,738 an ounce during the day, driven by an upward wave c.Spot silver rose 1.2 percent to USD 32.59, on course for its biggest daily rise in a week and half.INVESTMENT DEMAND UP; ETF HOLDINGS AT RECORDHoldings of gold-backed exchange-traded funds rose to a record high of 75.421 million ounces on November 16, suggesting unabated investment interest.Speculators raised their net long bets in US gold in the week ended November 13 from the lowest level in about three months hit a week earlier, the US Commodity Futures Trading Commission said.Net long positions in US silver edged up to 27,802 contracts from 27,350 contracts a week earlier, their lowest since late August.But Asia's physical market was sluggish as buyers shied away, with prices settling back into a range-trade mode."We see some fund buying interest and some stop-loss buying after prices broke above USD 1,720, but the physical demand is very, very slow," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
