Gold rises due to physical demand, weaker dollar

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Gold rose on Monday, extending its gains after its strongest week in a month, as the dollar slipped and European stock markets steadied, while physical buying remained strong in Asia.

Volumes were likely to remain thin throughout the day as both Britain and the United Sates had public holidays.

Spot gold rose two percent last week, mostly benefitting from a lower dollar and a shift of funds out of equities. It was up 0.6 percent to $1,394.39 an ounce by 1216 GMT.

US gold futures for June delivery rose 0.5 percent to $1,394.00 an ounce.

Gold is still down nearly 17 percent this year, however, after last month's rout pushed prices down to a more than two-year low of $1,321.35. The drop was caused by worries about central bank sales and fuelled by a break below key support at $1,500 an ounce.

"Gold is holding around the levels seen at the end of last week, as there are few factors that are balancing each other out at the moment," Commerzbank analyst Daniel Briesemann said.

"On the one side you have continued ETF (exchange-traded fund) outflows and speculators cutting bullish bets on COMEX, while on the other hand the metal is finding some support from continued demand for coins and bars amongst retail investors and ongoing purchases by central banks from emerging countries, which kept buying in April."

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.24 percent to 1,016.16 tonnes on Friday, their lowest since mid-February 2009. The fund held 1,350.50 tonnes of gold at the beginning of 2013.

Speculative net long positions - the difference between bullish and bearish contracts - held by COMEX gold futures and options hedge fund traders, fell to 35,686 lots in the week to May 21, the lowest level since July 2007, while short positions continued to rise, a report by the Commodity Futures Trading Commission (CFTC) showed on Friday.

Traders said that the expiry of June COMEX options, on Tuesday, may leave the market around current levels in coming sessions.

"COMEX option expiry tomorrow and good sized open interest at $1,400 will likely see the market sticky around here for at least the next few sessions," MKS Capital senior trader Alex Thorndike said in a note.

Physical demand for the metal remained strong in Asia, where premiums for gold bars hit a record high amid tight supplies last week.

Lower spot prices over the past month have attracted buyers mainly in China, the world's second biggest consumer of the precious metal after India, traders said.

Data from the International Monetary Fund (IMF) showed that Russia, Turkey and Kazakhstan were among the central banks buying gold in April, despite the metal's price fall, to diversify their strategic portfolio.

The dollar index was still 0.1 percent lower, while European shares steadied as markets were awaiting more macro economic data out of the United States to assess whether the Federal Reserve will slow its $85-billion monthly bond purchases in coming months.

Silver rose 1.2 percent to $22.66 an ounce, platinum was up 0.5 percent to $1,457 an ounce and palladium edged up 0.7 percent to $729.22 an ounce.

Related:
Topics
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

Further reading

Features & Analysis
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
Glitter, glamour and gold

Glitter, glamour and gold

Gold has long been seen by experts as a hedge against rising...

Turkish gold trade booms to Iran, via Dubai

Turkish gold trade booms to Iran, via Dubai

Couriers carrying millions of dollars worth of gold bullion in...

4
Most Discussed
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams