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Gold edges higher on stabilising stock markets

LONDON - Gold edged higher on Friday as signs of stabilising equity markets prompted investors to buy bullion, with dealers awaiting US payrolls data for direction.

Gold was trading at $665.90/666.50 an ounce by 1000 GMT, compared with $664.30/664.90 late in New York on Thursday.

“The recent consolidation in gold prices has been supported by positive investor sentiment -- gold holdings in streetTRACKS ETF have risen to an all time high,” said Suki Cooper, metals analyst at Barclays Capital, referring to exchange-traded funds.

“However the dollar has still proved to be the key driver of sentiment and prices. Today’s release of the US employment data is likely to provide direction for the dollar,” she said.

World stocks were steady on Friday, off this week’s 3-1/2 month low, as robust corporate earnings highlighted the underlying strength of the global economy, calming concerns about a global credit squeeze.

The metal recently suffered as a result of risk aversion in financial markets triggered by problems in the US credit market, with prices falling as low as $656.90 last week.

Gold, traditionally seen as a safe-haven asset, has recently been put in the same category as other commodities, which are considered riskier investments. It also becomes less attractive when interest rates rise as it is a zero-yielding asset.

The dollar steadied against major currencies, hugging tight ranges as investors shifted focus to US data from the credit and stock market volatility. The monthly non-farm payrolls report could give a clearer picture of the health of the US economy and help set the tone in currency markets, dealers said.

Gold often moves in the opposite direction of the dollar.

“Buying interest is returning to gold,” said Yuki Sonoda, an adviser at Daiichi Commodities Co. Ltd. “Steady growth in bullion held by gold ETFs suggests the attitude of long-term investors is different from that of leveraged funds.”

Bullion held by StreetTRACKS Gold Shares listed in New York, the world’s largest gold ETF, surged to a record high of $506.69 tonnes this week, signalling growing interest in the precious metal as a portfolio diversifier.

Wage negotiations

Platinum was at $1,282/1,287 an ounce, up $1 from its close in New York, with the market watching wage negotiations in South Africa, the world’s largest platinum producer.

Northam Platinum Ltd said trade unions agreed to accept a wage deal, marking the first wage agreement among platinum firms during a current round of wage negotiations in the country’s mining sector.

Anglo Platinum, the world’s top platinum producer, is set to hold a meeting with government mediators next week. South Africa’s biggest mining union declared a dispute with the company, the first legal step towards a strike, in July.

“Demand for platinum remains firm and supportive of higher prices. Purchases of newly-mined platinum for jewellery manufacturing in China have held up well in the face of higher prices,” Anglo American, which has a majority stake in Anglo Platinum, said in a statement.

Silver rose to $12.97/13.01 from $12.94/12.99 an ounce, while palladium was down $1 at $362/366 an ounce.