LONDON, Nov 22: Spot gold pared gains on Monday to trade largely unchanged on the day, losing steam after a rally in the euro fizzled, dragging down equities after initial euphoria over Ireland’s bailout faded.
Gold was last at $1,354.70 an ounce at 1210 GMT, having fallen to a session low of $1,353.65, down from $1,354.15 late in New York on Friday.
Ireland applied to the European Union and the IMF for financial aid to stem its banking and budget crisis, initially lifting the euro and broader financial markets. But concerns that the bailout -- the second this year in the single currency bloc after Greece -- will not be enough to remove the risk of contagion to other peripheral euro zone economies pushed the euro into negative territory against a range of currencies.
The move, which officials hope will help stabilise financial markets, boosted the euro, along with European equities. While such reassurances undercut some of gold’s safe-haven appeal, the subsequent decline of the dollar fed demand for the metal.
Holdings of gold in the world’s largest exchange-traded fund rose for the first time in two weeks, indicating investors are delving back into precious metals.
Spot gold rose 0.5 per cent to $1,360.55 an ounce by 1013 GMT, still over 4 per cent below early November’s record high at $1,424.10 an ounce, but above last week’s two-week trough. US gold futures for December delivery rose $8.0 to $1,360.30.
Safe-haven demand might be falling, but of course, this strengthening of the euro against the US dollar ... is probably more important for the gold market, said Peter Fertig, consultant at Quantitative Commodity Research.
Asian people are still happy to buy gold. For the time being, gold is neutral, trading on either side, said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that gold could fall if China did raise interest rates.
Gold prices fell by nearly 1 per cent last week as the certainty of a bailout for Ireland grew and rising US Treasury yields and stronger data supported the dollar.—Reuters