Gold off one-week high on profit taking

LONDON - Gold rose to a one-week high on Friday before slipping on profit taking, but dealers said it might hit its highest in seven months on positive sentiment.

By (Reuters)

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Published: Fri 9 Feb 2007, 6:33 PM

Last updated: Sat 4 Apr 2015, 9:54 PM

Silver jumped to a two-month high, while platinum eased after rising to its highest level in about 11 weeks.

Gold XAU rose to its highest since Feb. 1 at $661.30, but fell to $658.70/659.30 by 1109 GMT, against $659.40/660.10 an ounce in New York on Thursday, when it gained one percent.

“It’s definitely on a very good uptrend and $675 is on the cards. What we are seeing right now is temporary profit taking,” said Tariq Salaria, analyst at Standard Chartered Bank.

“I don’t think the IMF news is really impacting the gold price,” he added.

The International Monetary Fund could sell a limited amount of its gold reserves to increase its sources of income, IMF’s Managing Director Rodrigo Rato said. [ID:nL09572905]

But any sale should only be part of a wider solution to the global financial institution’s revenues and should not disrupt the gold market, he said.

The bank holds more than 3,200 tonnes of gold.

Bullion investors turned their attention to a Group of Seven finance ministers’ meeting starting later in the day that could influence the dollar and precious metals prices.

Dollar/euro higher

The dollar was marginally up against the euro on Friday.

Gold often moves in the opposite direction of the dollar and is generally seen as a hedge against oil-led inflation.

Oil flirted with $60 a barrel, briefly rising above the key level for the first time in a month on more signs of falling OPEC exports and problems at a US oilfield.

“I would expect that gold can go higher from here. But we just have to have one weekly close above the $650 line. If it doesn’t, that would mean that people don’t think that prices at these levels are justified,” said Michael Widmer, analyst at Calyon Corporate and Investment Bank.

A subdued physical market kept premiums unchanged at 10 US cents below the spot London price in Hong Kong GOLD/ASIA1. As the Lunar New Year draws near, purchases from jewellers have also subsided, said dealers.

“We remain positive that gold prices this year will be robust ... price volatility for the year ahead looks likely, as high pricing will dissuade jewellery consumption, yet fears of inflation, weaker dollar and high oil prices will tend to encourage investment into gold,” Numis Securities said.

In other precious metals, platinum XPT rose as high as $1,203 an ounce before falling to $1,198/1,203, versus $1,187/1,192 in New York.

Silver XAG rose to $13.89 and was last quoted at $13.86/13.91, against $13.75/13.80 late. Palladium XPD increased to $339/344 from $336/343 an ounce.

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