LONDON, Sept 27: Gold held firm on Thursday, supported by the dollar’s tumble to record lows against the euro and uncertainty in financial markets ahead of key economic data from the United States.
Platinum too was strong -- near Wednesday’s 10-month peak of $1,348 an ounce on expectations of higher demand over coming months for jewellery and industrial use.
Spot gold was at $730.35/731.05 an ounce up from $728.10/728.90 late in New York on Wednesday, when it fell more than $2. Bullion hit a 28-year high of $739 on Friday.
Traders said the precious metals market was waiting for US gross domestic product data due at 1230 GMT for clues to the health of the US economy and sentiment for the dollar, which fell to a new all-time low of $1.4140 against the euro. The main driver is still the dollar, you’ve got concerns about the US economy and Fed easing, said Suki Cooper, an analyst at Barclays Capital.
Then you’ve got a supply/demand imbalance. We see the market in deficit this year and that is being driven by jewellery demand from India and China, she said. A falling US currency makes dollar-denominated metals cheaper for investors in other currencies.
Gold gained in other markets also, with the benchmark August 2008 gold futures in Tokyo closing up 6 yen or 0.2 percent at 2,737 yen per gram.
The most-active December gold contract on the COMEX division of the New York Mercantile Exchange rose $1.8 an ounce to $737.20 in electronic trade.
Partly the market is technically a little bit overbought.
Also people are realising that the new year of the central bank agreement is about to start and no-one wants to get caught buying metal at the top of the market, said Simon Weeks, director of precious metals at Scotia Mocatta.
Having said that though, there are enough issues out there to suggest that gold is ultimately going to go higher.
In other metals, platinum rose to $1,345/1,350 an ounce from $1,343.20/1,350.20 in New York late on Wednesday, when it hit a 10-month high.
In other precious metals, silver rose to $13.44/13.49 an ounce from $13.35/13.40 in New York. Palladium was at $340/343 an ounce, versus $339.45/343.45.—Reuters