Moneycontrol PRO
Check Credit Score
Check Credit Score
HomeNewsBusinessWire News

Gold off 2-1/2-week high; Greece still a worry

MARKETS-PRECIOUS:Gold off 2-1/2-week high; Greece still a worry

February 23, 2012 / 08:17 AM IST

By Rujun Shen
SINGAPORE (Reuters) - Gold steadied on Wednesday after rising to its strongest in more than two weeks as concerns about Greece's ability to implement an unpopular bailout deal balanced gains triggered by the actual agreement.
Spot gold rose to $1,759.84 an ounce in early trade, its highest since February 3, before steadying at $1,757.80 by 0716 GMT. Slower factory activity in China also helped erase some of the early gains.
U.S. gold bounced from lows and added $1.20 to $1,759.70 an ounce.
Cash gold staged its biggest one-day rise in two weeks on Tuesday, climbing 1.5 percent along with riskier assets after euro zone finance ministers gave the greenlight to a 130-billion-euro bailout for Greece.
The euphoria faded quickly, however, as worries about implementation resurfaced, and data pointing to a continuous contraction of China's massive manufacturing sector added to the gloom.
Gold has been seesawing between $1,700 and $1,760 since late January, tracking Greece's torturous path to securing the bailout, while physical demand provided limited support.
"We don't see a substantial amount of enquiries in the physical market, either from the industrial or the jewellery sector," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
China's physical demand has slowed since the Lunar New Year celebrations in January, and India's demand from its jewellery sector is also declining, Poon added.
Technical analysis suggested that spot gold could break above $1,760 and trade in the range between $1,766 and $1,771 during the day, said Reuters market analyst Wang Tao.
INDONESIA SCRAP SELLING
The gains in gold prices over the past few days have triggered some scrap selling, especially from Indonesia, dealers said.
"Yesterday, the domestic prices in Indonesia were much lower than the international market, and people were taking advantage of the price disparity," said a Singapore-based dealer.
Gold bar premiums in Singapore dipped to $0.7-$1 an ounce from $1.20 previously, as a result, she added.
Spot platinum pierced through the 300-day moving average and hit $1,703 an ounce, its highest in nearly five months.
The gold-platinum spread dropped to below $60 an ounce, its lowest since late September, down from a peak near $220 in early December.
Traders said the rapid gains in platinum could be a combination of a breakthrough of a key technical resistance and worries about supply in top producer South Africa.
"Platinum cleared the previous high hit in November, so some long-positions holders could be adding to their positions," said a Tokyo-based trader, adding that industrial demand for the metal remained sluggish.
Asian shares eked out modest gains on Wednesday but the euro struggled for fresh upward momentum over doubts about the long-term feasibility of the Greek bailout and as concerns grew about rising oil prices.
(Editing by Sugita Katyal)

Tags: #Wire News
first published: Feb 22, 2012 02:12 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!

Advisory Alert: It has come to our attention that certain individuals are representing themselves as affiliates of Moneycontrol and soliciting funds on the false promise of assured returns on their investments. We wish to reiterate that Moneycontrol does not solicit funds from investors and neither does it promise any assured returns. In case you are approached by anyone making such claims, please write to us at grievanceofficer@nw18.com or call on 02268882347