LONDON (Reuters) - Gold held above $ 950 an ounce in Europe on Monday, bolstered by a weaker dollar, but further gains were limited by a shortage of demand for physical stocks of metal of jewelers and exchange-traded funds.
Silver prices rose to more than five weeks, however, as the largest silver-backed ETF reported an increase of 61 tons in its holdings of the metal to a new record.
Gold was bid at 954.10 dollars an ounce at 4:29 GMT, against $ 953.90 an ounce in New York on Friday. The silver went to $ 14.16 an ounce against $ 13.89, after touching a high of $ 14.19.
"Despite the weak dollar and the recovery in risk appetite could push (gold top), his failure so far to break above a key resistance point suggests that prices have a limited upside," said Pradeep Unni, senior analyst at Global Richcomm Services.
"The lackluster investment demand and low physical demand are adding to concerns that the summer rally may stop holding on to gains," he said.
The largest gold holdings in support of the ETF, New York, SPDR Gold Trust, were unchanged for a second day Friday after falling about 50 tons in July.
Foundation Securities in London, meanwhile said that the holdings of its three gold-backed exchange traded products (CTE) fell 1.2 percent last week. ETFs, including CTE, issues of securities backed by physical assets, and their purchase was a great source of gold demand in the first quarter.
Jewelry demand was also mediocre and consumption in India was weakened in the back of higher prices. "Operators are waiting for lower prices," said one trader.
But the weak dollar, which is driving demand for hard assets like gold and it is cheaper for holders of other currencies, has the strong support for gold prices.
The U.S. currency held near its lowest point this year against a basket of currencies as oil prices, rising global equity markets and positive U.S. economic data off investing in currencies seen as more risky.
STOCKS CLIMB
Global stocks surged to a new level of 2009 on Monday after signs of a rebound in economic activity in China helped push shares in Asia. European shares also rose after a shaky start to the day.
Rising stock markets and optimism over China's demand for hard assets boosted the interest in oil, with prices increasing at a high month. Oil prices in general, support stronger interest in gold as a hedge against oil-led inflation.
Oil and the dollar also fueled the gains in silver prices, but metal was further supported by a fresh entry in the largest silver-backed ETF, the iShares Silver Trust New York.
Its properties rose more than 60 tons to a record 8828 tonnes on Friday
"We expect silver to continue broadly tracking gold and the dollar in the coming sessions, with the intensification of the resistance expected around $ 14.40/14.65" said James Moore, analyst at TheBullionDesk.com.
Platinum was at $ 1211.50 an ounce, against $ 1207.50, while palladium was at $ 261 against $ 261.50. The platinum group metals traders are awaiting data from U.S. car sales later in the session management.
Since both platinum and palladium are mainly used in catalysts, prices have suffered a decline in demand for cars in the past year.
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