LONDON, Nov 12: Gold dipped a touch in Europe on Wednesday as easing oil and industrial metals prices weighed on prices, but the softer dollar limited losses.
Traders are awaiting data on US crude inventories later in the session for fresh direction.
Spot gold was at $730.30/732.30 against $731.70 an ounce late in New York on Tuesday. The metal fell 2 per cent in that session as the dollar firmed against the euro.
A stronger dollar tends to dent interest in gold, which is often bought as an alternative investment to the US currency.
A lot of people are standing on the sidelines and are not wanting to get involved until they have some kind of confirmation of direction, said Afshin Nabavi, head of trading at MKS Finance.
Base metals prices were also generally soft on demand fears.
Softer commodity prices usually pressure gold, as they dent interest in the asset class as a whole and reduce fears over inflation, against which bullion is often bought as a hedge.
Physical demand for gold jewellery, coins and bars was also underpinning prices at lower levels, with dealers reporting strong buying in major bullion market India as the wedding season gets underway.
In Europe, refiners are struggling to keep up with demand for certain products, according to traders.
Gold and silver should continue to be supported by strong physical offtake, although the strength of the US dollar is hampering attempts by the metals to trade up towards our one and three month forecasts, said UBS strategist John Reade.
Chinese investment demand is gathering pace this year, with investment reaching 38.4 tons in the first nine months of 2008 against 24 tons for the whole of 2007, the China National Gold Corp said at a conference.
Among other precious metals, platinum rose 3 per cent to a high of $840 an ounce, recovering some of Tuesday’s $34 an ounce dip, but quickly shed gains in later trade as oil and other commodities softened.
Spot platinum was later quoted at $821.50/841.40 an ounce against $812.50 an ounce late in New York on Tuesday. Spot palladium was at $213/221 an ounce against $212.
Spot silver was at $9.73/9.81 an ounce against $9.74.—Reuters