• Home
• /
• Business

Gold rangebound ahead of US economic data

Traders said investment funds were cautious in taking new buy positions after suffering losses in recent weeks, especially after gold failed to breach $700 an ounce.

“It’s very quiet. Gold did move with the dollar a couple of days ago, but at the moment it’s in no-man’s land. It is stuck between a trading range of $655-$670,” said a European precious metals trader.

Spot gold was quoted at $661.20/661.70 by 0957 GMT, compared with $660.60/662.10 late in New York on Wednesday and last week’s two-month lows of $653.40.

“As our US economist expects data being released today to come in far worse than the consensus predicts, we are looking for gold to recover further,” Dresdner Kleinwort said in a note.

“Also the continued tight supply of gasoline in the US should remain supportive for crude oil prices and thus for gold. However, the upside remains capped for the time being as physical demand from India is expected to show the typical seasonal decline with the start of the monsoon season,” it said.

The euro fell towards recent six-week lows versus the dollar after below-forecast German business sentiment data sparked some euro liquidation.

Investors are now waiting for US durable goods, housing and job reports to assess further the likelihood of the Federal Reserve cutting interest rates from the current 5.25 percent.

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

Oil climbed above $71 a barrel to a nine-month high after a report by the United Nations’ nuclear agency opened the way to tougher sanctions against Iran.

“Although gold once again tested the $665 level, sentiment would remain weak if it fails to cross this barrier imminently, with pressure likely to force a move toward $650,” Standard Bank said in a daily market report.

But miners remained bullish on gold’s long-term prospects.

Greg Wilkins, chief executive of Barrick Gold, the world’s No. 1 gold producer, told the Reuters Global Mining and Steel Summit in New York that a lower gold supply and strong jewellery demand will continue to support higher gold prices.

He expected the mining industry would be challenged to maintain the current production level, and miners would need higher prices to justify their investments.

In other metals, platinum fell $1 to $1,299/1,302 an ounce, while palladium was quoted at $371/376, down $2 from its last quote in New York. Silver inched higher to $13.05/13.09 an ounce from $12.99/13.03.