Gold Firms as Weak Dollar Prompts Buying
Source: http://feedproxy.google.com/~r/ContrarianProfits/~3/O5bTRcaI7OI/18911Posted on Thursday, July 9th, 2009 | In Exchange Traded Funds, Market Commentary
Gold firmed today, Thursday, as weakness in the dollar prompted interest in the precious metal as a currency hedge, with some physical demand after the previous session’s fall also supported prices.
Spot gold was bid at $912.50 an ounce at 1417 GMT, against $908.45 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $3.50 to $912.80 an ounce.
Gold sold off on Wednesday in line with other commodities, slipping to an eight-week low, after the U.S. Commodity Futures Trading Commission said it was considering a clampdown on excessive speculation in commodities.
Afshin Nabavi, head of trading at MKS Finance in Geneva, said the slip was met with some light physical buying in the Far East and Europe.
“We saw some small demand out of the Far East this morning,” he said. “But India and the Middle East is still very quiet.”
“Also, the U.S. dollar is a bit weaker today,” he added.
The dollar gave back some of the previous session’s gains on Thursday as equities firmed in Europe and U.S. stock futures rose, denting interest in the currency as a haven from risk.
A recovery in stock markets after a five-day losing streak, gains in industrial commodities such as oil and base metals and a less cautious tone to currency markets suggested recent sessions’ heavy risk aversion may be abating.
Oil’s tick higher also helped support gold, which can be bought as a hedge against oil-led inflation.
Demand for gold investment products such as exchange-traded funds — a major support of prices earlier in the year amid volatility in other markets — remained sluggish, however.
Holdings of the world’s largest gold ETF, the SPDR Gold Trust , declined more than 10 tonnes on Wednesday, while those of ETF Securities’ ETFS Physical Gold product slipped 12,500 ounces 0.4 percent.
OUTPUT FALLS
In supply news, South Africa, the world’s third largest gold miner after China and the United States, said its output of the metal fell 10.5 percent in May from a year ago.
Among other precious metals, platinum was at $1,104.50 an ounce against $1,096, while palladium was at $235 against $231.50. Both metals are primarily used in car manufacturing as a component in catalytic converters.
Traders of palladium in particular were cheering news from China that its passenger car sales rose 47.7 percent in June from a year earlier.
Chinese cars are usually petrol-fuelled, meaning they use a higher proportion of palladium than platinum, which is a primary component in diesel catalysts.
Dealers say as palladium is still relatively expensive, it is unlikely to immediately post significant new gains, although platinum has met some interest.
“Even though there is very little obvious buying taking place right now, platinum is still managing to hold its head above $1,100,” said one analyst, adding strong turnover in Shanghai suggests good Chinese buying at these levels.
Elsewhere silver was at $12.85 an ounce against $12.84.
LONDON, July 9 (Reuters)
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July 10th, 2009 at 12:20 pm
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