Gold near one-month high; economic recovery hopes weigh

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Gold held near a one-month high on Wednesday but faces a strong resistance at US$1,700 an ounce, as it struggles to attract fresh buying from investors who opted for riskier assets against the backdrop of a global economic recovery.

The US debt ceiling talks, seen as a potential threat to the recovery of the world's top economy, have shown positive signs, as the House of Representatives plans to pass a bill on a nearly four-month extension of the borrowing limit.

A rosier global economic outlook based on recent upbeat data from the United States, China and even Europe, has triggered rallies in equities and precious metals with industrial applications, including silver, platinum and palladium, putting gold in the shadow. 

"It looks like the debt ceiling problem is solved for the time being, and investors would pour money into the stock market rather than gold," said Ronald Leung, a gold dealer at Lee Cheong Gold Dealers in Hong Kong.

The Standard & Poor's 500 index hit a five-year high in the previous session, up 4.6 percent so far this month, outperforming the gain of 1 percent in gold - the worst performer in the precious metals complex.

Spot gold was little changed at US$1,692.60 an ounce by 0328 GMT. It hit a one-month high of US$1,695.76 in the previous session after the Bank of Japan announced bold stimulus measures in an attempt to revive the anaemic economy.

US gold traded nearly flat at US$1,692.60.

Technical analysis suggested spot gold may rise to US$1,706 an ounce during the day, as an upward wave starting from the January 11 low of US$1,653.44 has not been completed, said Reuters market analyst Wang Tao.

Spot silver inched down 0.2 percent to US$32.12 an ounce, snapping a seven-day winning streak that matched a similar run in August 2011.

The robust inflow in silver-backed exchange-traded funds has helped spot silver prices rally more than 6 percent so far this year, as the metal's exposure to a quickened pace in economic growth attracted investors.

Holdings of iShares Silver Trust, the world's largest silver ETF, stood at 10,689 tonnes on January 22, up 604.9 tonnes, or nearly 6 percent from the end of 2012.

In comparison, SPDR Gold Trust, the world's top gold ETF, saw an outflow of nearly 15 tonnes so far this year.

Analysts polled by Reuters expected silver to recover from last year's decline before picking up next year. Gold could see average record highs this year and the next, but its bull run may be topping out.

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Features & Analysis
Petroleum producers shift attention from Middle East: Kemp

Petroleum producers shift attention from Middle East: Kemp

Following four decades of war, sanctions, nationalisation and...

Gold industry shifts east as Dubai plans huge refinery

Gold industry shifts east as Dubai plans huge refinery

$60m refinery being built by Kaloti Precious Metals in Dubai...

Dubai gold dealers shun Turkish bars on fear of links to Iran

Dubai gold dealers shun Turkish bars on fear of links to Iran

Trade in Turkish gold bars to Iran via Dubai is drying up as...

2
Most Discussed