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Gold ticks down on dollar rise, may weaken further

Silver traded near Tuesday’s one-month lows, but platinum and palladium moved marginally higher.

“The gold market is long and I don’t think investors are very keen to get short the market here,” said David Holmes, director of precious metals sales at Dresdner Kleinwort.

He said the current weakness was another downward phase and prices might decline a little bit further, but ultimately institutional investors would come in to pick up the metal.

Spot gold XAU was quoted at $672.50/673.00 by 1000 GMT, against $673.70/674.20 an ounce in New York late on Tuesday, when it had fallen more than $5 on a surging dollar.

The market came under some pressure because of the dollar, which gained after recent record lows.

“Further short-term declines in gold cannot be ruled out,” said John Reade, head of metals strategy at UBS Investment Bank.

“Any further evidence of better than expected US data could see EURUSD (euro/dollar) head lower and gold under pressure from more long liquidation,” he said in a daily note.

Metals markets watched a strike in Peru, which is among the world’s top two silver producers, and is No. 3 in copper and zinc and No. 5 in gold.

Peru’s government reestablished formal talks with the country’s largest miners’ union and asked workers to end their nationwide strike, which started on Monday.

Barrick Gold Corp. ABX.TO, the world’s biggest gold producer, reported a first-quarter loss as it took a $557 million charge to exit hedge positions and take advantage of strong gold prices.

Investors were cautious ahead of the release of US jobs data on Friday.

“We want to see how the dollar reacts after the release of the jobs data before taking new positions in gold,” said Tatsuo Kageyama, a market analyst at Kanetsu Asset Management.

Trading is likely to be thin in Asia this week as Japanese markets will be closed on Thursday and Friday for the Golden Week holidays.

In other metals, platinum XPT rose $3 to $1,286/1,293 an ounce, while palladium XPD was up $2 at $368/373 an ounce. Silver XAG was down 2 cents at $13.22/13.26 an ounce.