Gold rebounds after six-week low
Gold regained strength on Thursday after hitting a 6-week low the previous day, but a strong U.S. dollar capped gains as uncertainties about the outcome of a European Union summit drove some investors away.
Gold, which hovered below the closely watched 50-day and 100-day moving averages, has failed to attract safe-haven buying this week despite fiscal worries about Greece, with losses in equities market bringing additional pressure.
Spot gold was at $1,088.80 an ounce by 0620 GMT, up $2.30 from New York’s notional close. On Wednesday, gold dropped to as low as $1,084.85 an ounce, its weakest since February 12.
Investors were waiting for an EU summit on Thursday and Friday for any signs of assistance for Athens, after efforts to arrange a special euro zone meeting failed, with France and Germany discussing what role the IMF might play.
Demand from jewelers picked up in Asia after prices fell more than $18 since Monday but low volume suggested consumers were waiting for more declines as bullion traded below the psychological level of $1,100 an ounce.
Gold hit an intraday high of $1,089.90 on Thursday before losing some of the gains after the euro changed course and dropped to its weakest in 10 months versus the dollar.
“The bearish sentiment in gold is likely to stay unless something positive emerges from the euro bloc. In addition, gold also seems to reflect the nervousness about a potential rate hike,” said Pradeep Unni, senior analyst at Richcomm Global Services in Dubai.
“The metal will continue to meander in familiar ranges, and as the key supports of $1,084-$1,080 have been breached, further downside is possible. Bargain hunters are certainly visible at levels below $1,095 but that largely seems to be a temporary phenomenon.”
U.S. gold futures for April delivery was steady at $1,089.1 an ounce, hovering near Wednesday’s six-week low.
Further problems in the euro zone also may support gold.
On Wednesday, Fitch Ratings lowered Portugal’s sovereign credit rating to AA-minus from AA, with a negative outlook, which coupled with concerns about Greece a day ahead of the summit had investors again weighing the sustainability of the euro zone.
In other precious metals, silver steadied but platinum and palladium extended losses on selling by Japanese speculators.
Source: Reuters