Gold hovers near $1,100/oz on currency concerns

By Jan Harvey

LONDON (BestGrowthStock) – Gold held near $1,100 an ounce on Monday, lifted by concerns over the outlook for the currency markets as traders wait to see whether a meeting of Eurogroup ministers will result in more support for debt-laden Greece.

Spot gold was bid at $1,100.50 an ounce at 2038 GMT, against $1,092.40 in New York late on Friday. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose 1 percent to $1,101.20 an ounce.

Gold priced in euros rose to a peak of 809.50 euros an ounce, just below its record high of 812.43 euros an ounce set in December.

“You would hope gold would be doing well, given all the problems in Greece, with government debts and so on,” said VM Group analyst Matthew Turner.

“The Greece crisis has been a bit overblown, but it is still … causing nervousness among investors,” he added. “The solution to all these debt problems seem to be either devaluation or inflation, both of which are gold supportive.”

The euro fell (Read more about the trembling euro. ) against the dollar, hovering near nine-month lows as investors waited to see whether meetings of European finance ministers would result in further support for Greece.

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Worries over the country’s indebtedness kept the U.S. dollar supported and weighed on the euro as the market sought assets perceived as safer.

Strength in the dollar usually weighs on gold, but when fears over financial market stability are rising, both sometimes benefit from risk aversion.

“Investors seem to be partly offloading euro-zone risk equally in gold and the U.S. dollar,” said Pradeep Unni, senior analyst at Richcomm Global Services.

“This is specifically the reason why gold is firm despite the greenback also being strong.”

OIL HOLDS GROUND

Among other commodities, oil held near $74 after stronger-than-expected Japanese growth data was counterbalanced by concerns rising energy demand could be curbed by China’s moves to tighten monetary policy. (O/R: )

Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.

On the physical markets, India’s wholesale gold demand cooled off on Monday as prices edged toward the most-watched $1,100 an ounce mark, after offtake picked up for most of last week, dealers said.

Holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust, were unchanged at 1,106.378 tonnes on Friday. (GOL/SPDR: )

Among other precious metals, silver was bid at $15.52 an ounce against $15.48.

The world’s largest silver ETF, the iShares Silver Trust, said its holdings rose 48.84 tonnes or 0.5 percent from the previous business day to 9,446.40 tonnes as of February 12.

ETF Securities said holdings of its ETFS Physical Silver (PHAG.L: ) ETP hit a record high last week, reaching 25.3 million ounces by Friday.

Platinum was at $1,512.50 an ounce against $1,512.50, while palladium was at $418.50 against $414.50.

“We remain of the opinion that (palladium) prices below $400 an ounce provide good opportunities for industrial end-users to cover some of their future requirements,” said precious metals house Heraeus in a weekly report.

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(Editing by James Jukwey, Gary Crosse)

Gold hovers near $1,100/oz on currency concerns