LONDON, Aug 2: Gold edged higher on Thursday as world stock markets rose and credit markets stabilised, but dealers said the metal might be confined to a range in the near term.
Spot gold was quoted at $666.00/666.60 an ounce by 1000 GMT, compared with $664.10/664.90 late in New York on Wednesday, when prices fell as low as $659.
The market is waiting again for direction. We've got the European Central Bank (ECB) setting interest rates today, so
I think the focus is going to
be very much again on currencies, James Moore, metals analyst at TheBullionDesk.com, said.
For gold, we are in the summer months, and that's when physical buying is quite slow and prices tend to weaken.
In the next four-to-six weeks, we are probably going to trade largely sideways, he said.
The euro and sterling steadied against the dollar ahead of interest rates decisions in Britain and the euro zone.
The Bank of England and the ECB are both seen leaving rates on hold this month, but analysts are watching for any European Central Bank (ECB) statement that might flag a move in September.
Britain's FTSE 100 share index bounced back following upbeat results reports from heavyweights, while Asian share markets higher after a rebound on Wall Street in New York, recovering from steep falls earlier this week on concerns about deteriorating credit conditions.
Gold, traditionally seen as a safe haven for investors, has more recently been put in the same category as other commodities, which are considered riskier investments.
It is also less attractive when interest rates are rising as it is a zero-yielding asset.
Gold is confined in a narrow range for the long summer holiday and while you say the equity market, oil prices or the US dollar might have a little bit of influence, the reaction on gold is not that much, said Ellison Chu of Standard Bank London in Hong Kong.
In industry news, the world's No.1 gold producer, Barrick Gold Corp., said its second-quarter profit fell 14 per cent as the company took a 66 million dollars charge to unwind its last remaining gold hedges on current production.
Gold hedging by mining companies fell by 5.4 million ounces to 31.2 million in the second quarter of 2007 and for the full year, hedging is expected to drop between 11-13 million ounces, a report said.
In South Africa, trade unions declared a dispute against the country's major gold companies after the workers rejected a higher wage offer, a spokesman for one of the labour groups said on Wednesday.
Platinum was flat at $1,283/1,287 an ounce, while silver was at $12.99/13.03 an ounce, versus $12.89/12.94 in New York.
Palladium was unchanged at $362/365.—Reuters