LONDON, Feb 15: Gold eased into a narrow range in Europe on Wednesday above the previous day’s five-week lows, with market players seeking a solid base, dealers said.
Prices have been volatile in the past two weeks over a wider band, hitting 25-year highs of $574.60 an ounce then retreating by $40 only to rebound again.
We are going to see a lot more volatile trade. But we are going to hold above $525 before looking to move back up towards $570 area, he said.
Spot gold rose as high as $547.75 an ounce in Asia before buying subsided. It was quoted at $543.50/544.00, lower than $545.40/546.30 late in New York, and above a five-week low of $534.50 hit on Tuesday.
In Japan, benchmark gold futures on the Tokyo Commodity Exchange, currently December, rose its daily limit to 2,107 yen ($17.90) per gram after a recovery in New York’s COMEX sparked short covering. It ended at 2,102 yen, up 55 yen from Tuesday’s close.
Concerns of more hikes in the US interest rates could dampen the bullish sentiment in the short term, but the metal could draw strength from the long-term expectations for US dollar weakness, Standard Bank said in a report.
Oil prices held under $60 a barrel after sliding to their lowest level this year, as dealers anticipated a big jump in already healthy US inventories.
A firm US currency makes dollar-priced gold costlier for holders of other currency, while soft oil prices ease inflation concerns and lower safe-haven appeal of the metal.
Dealers said price volatility had forced jewellery makers and investors to cut buying and watch price moves.
The market is so choppy in the last 10 days, that’s why some physical buyers need to observe the market trend, said a bullion dealer in Hong Kong.
In other markets, base metals drifted lower in early London Metal Exchange trade, but dealers said the market was expected to consolidate after recent selling.
In other precious metals, platinum fell to $1,011/1,015 an ounce from New York’s $1,015/1,020 and off a five-week low of $995. Palladium was unchanged at $280/284 and ounce. Silver edged down to $9.27/9.30 an ounce from $9.30/9.33.—Reuters