Gold bounces on steadier euro; upside limited

By Lewa Pardomuan

SINGAPORE (BestGrowthStock) – Gold ticked higher on short covering on Wednesday after the euro steadied against the U.S. dollar, but the metal remains vulnerable to selling pressure after previous failed attempts to test new highs.

While heading for its sixth consecutive quarter of gains, gold was still about 10 percent below a record high around $1,226 struck in December and hovered below the 100-day moving average.

Spot gold was at $1,105.90 an ounce by 0516 GMT, up $3.40 from New York’s notional close on Tuesday, when it slipped to track a falling euro. Gold has been in a $60 trading range in the past six weeks, indicating indecision among investors.

Immediate resistance was seen at recent highs above $1,110.

“Overall, I don’t think that gold is necessarily poised for another round higher,” said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.

“People are reluctant to take it higher from the general level in the absence of some further significant change in fundamentals or other views. Gold was supported a bit when concerns about Greece were at the most intense.”

Gold had been supported by safe-haven buying related to Greece’s debt problems but profit taking as well as frequent rebounds in the dollar have erased some of the gains.

U.S. gold futures for June delivery added $1.20 to $1,106.90 ounce after falling on Tuesday due to month-end position squaring and contract rollover.

The euro was steady around $1.34 but looked increasingly vulnerable as a bout of short-covering looked to run its course and fiscal worries resurfaced.

Trading was slow ahead of the release of China’s purchasing managers’ index for March on Thursday due to persistent worries about monetary tightening that could cut the country’s demand for industrial metals and affect sentiment in commodities.

“China’s PMI figures will be out tomorrow and people agree the numbers will be strong. It may give more reasons for the regulators to come in and tighten up earlier,” said a dealer in Singapore.

While China’s robust growth has become a major driver of the global economy, fears of further policy tightening by Beijing to head off inflationary overheating have rattled financial markets in recent months.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,129.823 tons as of March 30, unchanged from the previous business day.

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(Editing by Ed Lane)

Gold bounces on steadier euro; upside limited