Gold price declines
Gold edged down on Tuesday as early buying subsided and the euro slipped against the U.S. dollar, but volatile stock markets could encourage some investors to shift to bullion.
Gold could challenge its lifetime high of around $1,264 an ounce touched in June as the outlook for the global economy remained murky and demand from jewelers steady during the festive season in main consumer India, said dealers.
Spot gold eased 20 cents to $1,249.35 an ounce by 0525 GMT, having hit an intraday high of $1,251 on light physical buying. U.S. gold futures for December delivery were unchanged at $1,251.1 an ounce.
“Even though there’s some liquidation in the ETF, everybody is still bullish. There’s so much uncertainty in the economy,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
“The festive season is on and we expect to see buying at the lower end. I think the next target is the all-time high.”
Demand in India rises during the festive season, which begins with Raksha Bandhan in August and lasts through November with Dhanteras — the single-biggest gold buying day.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1,294.442 tons by Sept 3 from 1,294.908 tons on Sept 2. The holdings surged to a record 1,320.436 tons on June 29.
Silver was barely changed at $19.83 an ounce after rising as high as $19.92 on Monday, matching a peak seen on Friday — the metal’s highest level since March 2008.
Some physical dealers said the recent gains were driven by speculators, who took advantage of silver’s cheap price compared to other precious metals, and not by purchases from the industrial sector.
The Nikkei slipped on Tuesday, hit by profit-taking after four straight days of large gains. Investors are keen to see how Wall Street reacts to U.S. President Barack Obama’s infrastructure plan proposal.
Scrambling to spur job creation, Obama proposed a six-year plan to rebuild U.S. infrastructure with an initial $50 billion investment and prepared new business tax cuts.
The euro slid from a three-week peak against the dollar hit the previous day, as rekindled worries about the European banking sector prompted investors to cut risks.
Fears that the euro debt crisis would spread and the U.S. economy was slowing sent gold to a record high in June.
In Shanghai gold futures, the most active December contract was barely moved at 272.87 yuan ($40.2) a gram.
Source: Reuters