Gold rebounds as investors buy on price dips

LONDON - Gold bounced back on Tuesday as buying interest from investors resurfaced at lower levels, but dealers said the market lacked impetus to break free from the current range.

By (Reuters)

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Published: Tue 11 Jul 2006, 7:54 PM

Last updated: Sat 4 Apr 2015, 3:08 PM

“The general sentiment towards the market is still bullish and a price level around $600-$630 an ounce is frequently seen as a level where you can get back into the market,” said Michael Widmer, analyst at Macquarie Bank.

“But summer months are usually relatively quiet months on the gold side. People are just waiting, on the one hand, for some macro news and on the other hand, for the main demand season to start.”

Spot gold XAU hit a low of $621 an ounce due to profit taking from last week’s one-month high of $637, but later climbed to $628.70. It was at $627.50/629.00 by 0942 GMT, versus $624.00/625.50 in New York late on Monday.

“The price recovery indicates the robust(ness) and resilience of the current gold market and the potential for a longer-term upward trend, led by rising demand, some interruptions to mine supply and central bank activity,” said John Meyer, analyst at Numis Securities.

Dealers said the currency market and oil price movements could offer direction.

The dollar steadied against the euro ahead of this week’s U.S. trade data, while oil prices eased.

A weaker dollar prompts investors to buy dollar-denominated gold, which is also seen as a hedge against inflation.

“For the moment, gold looks set for more mixed action between $610-$635 as traders await clearer direction from the currencies and outcome of the North Korea/Iran political tensions,” said in a daily report.

In industry news, China’s gold output rose 12 percent in the first half of this year to 110 tonnes, the nation’s top planner estimated, as consolidation and new mine development allowed the country’s largest firms to produce more.

In other precious metals, platinum prices XPT rose to $1,229/1,234 an ounce from $1,219/1,225 in New York, while Palladium XPD was at $320/325 an ounce from $314/320.

Silver XAG increased to $11.16/11.26 an ounce from $11.05/11.15 in the U.S. market on Monday, when it fell to its lowest since June 30 at $10.87 an ounce.

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