Gold jumps on ME tension, Japan quake
Tokyo, March 11, 2011
Gold defied weaker oil prices and gained on Friday after a major earthquake struck northeast Japan and lingering worries about further unrest in the Middle East supported bullion.
But spot gold remained on track for its biggest weekly decline since late January, down more than $20 from a lifetime high hit at the start of the week.
Tokyo gold futures on Tokyo Commodity Exchange (TOCOM) pared losses on safe haven buying after an earthquake of magnitude 8.9 struck Japan, including capital Tokyo, causing many injuries, fires and a 10-metre tsunami along parts of the country's coastline.
'It's a bad Friday. It's quite a strong tremor but Tocom is still operating,' said a bullion dealer in Tokyo. Gold added $3.66 to $1,416.25 by 0730 GMT, but a firming US dollar could also cap gains.
Gold hit a record of $1,444.40 on Monday, when investors poured money into bullion as oil jumped on violence in Libya and after the downgrade of Greece's credit rating reignited worries about euro zone sovereign debt.
'We are waiting for some escalation in the situation within Saudi. If protesters become more aggressive in some way, you might find see more buying but again, it's being pressured on one side by the dollar,' said Darren Heathcote, head of trading at Investec Australia in Sydney.
'On the one side, we've got, probably, downward pressure as a result of a stronger dollar and a bit of flight to safety going on. On the other hand, gold's attractiveness as a safe haven would probably increase, given the uncertainties surrounding Middle East and particularly what's going on in Saudi.'
Brent crude fell $2 towards $113 on Friday as a quiet start to the planned 'day of rage' in Saudi Arabia eased concern that unrest would spread in the world's top oil exporter, prompting investors to unwind positions.
US gold futures for April rose $3.9 to $1,416.4 an ounce. The contract hit record at $1,445.70 on Monday.
Spot gold will fall more next week to a range of $1,360 to $1,376 per ounce based on its wave pattern and a Fibonacci retracement analysis, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.-Reuters