LONDON, Nov 7: Gold edged higher in Europe on Monday after slipping to a near-two-month low on Friday when a strong dollar triggered fund liquidations, but the metal was vulnerable to further correction in the near term.
But the long-term outlook remained positive and some analysts saw the metal moving towards the last month’s high of $480.25 a troy ounce — the highest in about 18 years, and eventually trying to touch the big $500 mark.
Spot gold was quoted at $457.40/458.15 an ounce up from $456.20/457.00 in New York late on Friday.
I think the shorter-term trend is definitely for a bias to the downside. Both technical factors and currency movements are not positive for gold at the moment, said Yingxi Yu, precious metals analyst at Barclays Capital.
The dollar spiked to a two-year peak against the yen and an 18-month high versus the euro on Monday as investors expected the US currency’s interest rate advantage to keep widening.
A strong US currency often makes dollar-priced gold costlier for holders of other currencies and lowers demand.
So far this morning gold has tracked sideways in quiet trade, but further pressure is expected in the coming days as fund/speculative players continue to reduce their holdings, James Moore of TheBulliondesk.com said in a note.
I still think there is potential for gold to dip to $445 in the short-term before recovering towards year-end.
Dealers said a drop in crude oil prices also lowered sentiments.
Oil prices dipped to $60 a barrel as mild weather across the northern hemisphere and recovering US crude production soothed worries over a supply shortfall.
Some dealers said physical demand had resurfaced at lower prices and would help gold not falling beyond a level.
A quick return to last month’s high of $480 is more than doubtful, Wolfgang Wrzesniok-Rossbach, the head of precious metals at Heraeus, said in a report.
Looking far beyond this week’s potential price moves, we continue to be bullish for the yellow metal, not ruling out price above $500 during the course of the winter, he said.
In other precious metals, silver was quoted at $7.50/7.53 a troy ounce, compared with $7.52/ 7.55 last quoted in the US market.
Platinum fell to $928/931 an ounce from $929/933, while sister metal palladium was higher at $225/228, compared with $220/225. —Reuters
