Gold rises on fiscal worries; palladium at 2-year high

By Lewa Pardomuan

SINGAPORE (BestGrowthStock) – Gold held near a 1-month high on Wednesday as renewed worries about debt-ridden Greece and volatile currencies boosted its safe-haven appeal, while steady purchases by autocatalyst makers sent palladium to 2-year highs.

While bullion hovered above the closely-watched 14-, 50- and 100-day moving averages, a firmer U.S. dollar could still induce a correction and dealers said the metal faced stiff resistance at a March high around $1,144 an ounce.

“I think the market is wary that at some stage the safe-haven story will probably abate. Potentially, there’s some downside risk if safe-haven issues start to ease,” said Mark Pervan, senior commodities analyst at ANZ in Melbourne.

“But at the moment, the market is taking the latest Greek news as the reason to be buying. If the dollar continues to strengthen, it’s going to limit further gains.”

Spot gold was at $1,136.85 an ounce by 0528 GMT, up $3.65 from New York’s notional close on Tuesday, when it hit a 1-month high of $1,138.40 an ounce despite a rising U.S. dollar against the euro.

U.S. gold futures for June delivery added $1.9 to $1,137.9 an ounce, holding near Tuesday’s 1-month high. Gold in euro terms held near a record.

The euro fell (Read more about the trembling euro. ) to around $1.3380 following reports that Greece wanted to renegotiate a joint EU-International Monetary Fund aid deal reached last month. Greece denied the reports, but that has had little impact.

Thinly-traded palladium jumped as high as $510.25 an ounce, its strongest since March 2008, on purchases from makers of autocatalysts in Japan as well speculative buying driven by hopes for a global economic recovery.

Platinum hit a 20-month high of $1,723 an ounce, catching up with its sister metal.

“These two metals will perform better when you see rising industrial production. That means stronger catalytic demand and so forth,” said Pervan of ANZ.

“The recent economic data out of the U.S. particularly has probably been a good encouraging sign for these two markets.”

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,129.823 tonnes as of April 6, unchanged from the previous business day.

Some dealers noted buying from investors but low volumes meant bullion was prone to sharp movements. “I think gold is also helped a bit by the Fed saying the interest rates will remain low for a longer period,” said a dealer in Hong Kong.

The U.S. Federal Reserve could keep interest rates ultra-low for even longer than investors anticipate if the outlook worsens or inflation drops, minutes from the central bank’s last meeting suggested.

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(Editing by Michael Urquhart)

Gold rises on fiscal worries; palladium at 2-year high