Gold drops on profits
Gold futures ended slightly lower but held above $950 an ounce on Friday as investors took profits, but inflation concerns amid economic optimism should continue to stir investment demand.
Even though the price of gold did not rally further this week, bullion should be well supported at current levels because of dollar weakness and risk-aversion demand amid lingering uncertainty for the financial markets, analysts said.
“We are still up here in quite a high range. We don’t see any physical buying coming in at these levels, but what is supporting it is the dollar,” said Andrey Kryuchenkov, an analyst at VTB Capital.
“The dollar’s weakness and the idea that inflation expectations are on the rise are holding gold here,” Kryuchenkov said.
U.S. August futures settled down $1.70 at $953.10 an ounce on the COMEX division of the New York Mercantile Exchange.
Spot gold traded at $951.05 at 2:51 p.m. EDT (1851 GMT) against $947.15 in its previous session finish.
The dollar weakened against the euro on Friday after a stronger-than-expected estimate of the German Purchasing Managers’ index and improved surveys on the euro zone services and manufacturing sectors boosted the single currency. FRX/]
Bullion investors also locked in profits ahead of the weekend. On Thursday, spot bullion rose as Wall Street rallied over 2 percent and the Dow Jones industrial average closed over 9,000 for the first time since January.
BUYERS AT BAY
A rise in Indian gold prices above 15,000 rupees per 10 grams is keeping buying there at bay. “Traders feel uncomfortable to bid gold at 15,000 rupees,” a Mumbai-based dealer said.
A Reuters poll released Friday showed Indian gold prices were expected to ease by end-September as the rupee was likely to strengthen and domestic demand may be subdued.
Last year India was the biggest gold jewelry consumer in the world, accounting for nearly 475 tonnes of sales, according to metals consultancy GFMS.
Investment demand was lackluster, with holdings of the world’s largest gold exchange-traded fund, the SPDR Gold Trust, stable on Thursday after two days of outflows.
Analysts who study historical chart patterns to determine future price moves say the precious metal is also facing tough technical resistance below $960 an ounce.
On the supply side, the Russian Gold Industrialists’ Union said the country’s production rose nearly 25 percent in the first half of the year.
Among other precious metals, silver was at $13.85 an ounce against $13.70, platinum was at $1,184 an ounce against $1,174, and palladium at $257.50 from $255.50.
ETFS Silver Trust is expected to hold assets of more than $1 billion over the next six to 12 months, said a senior company official.
Source: Reuters