Spot gold steady in thin trade
Singapore, July 8, 2011
Spot gold was steady in thin trade on Friday, ahead of a key US employment report that is expected to show improvement in the labor market and boost optimism on prospects for the world's largest economy.
But stronger-than-expected payrolls data could ease fears that the US economy remains in a prolonged soft patch, potentially undermining safe-haven demand for bullion.
Spot gold moved within a narrow $3 range and was little changed at $1,531.61 an ounce by 0616 GMT. Prices were headed for a weekly gain of 3 percent, its strongest week since the end of April.
US gold edged up 0.1 percent to $1,532.30.
Inflation concerns in the euro zone and China remain supportive, after the European Central Bank and China's central bank both raised rates this week in a bid to tackle rising prices.
In addition, the ongoing debt crisis in some euro zone nations is expected to underpin gold's sentiment.
'The euro zone debt crisis is certainly one factor supporting gold going forward,' said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
'Last week we saw some long positions liquidated but now the market is looking at the upside again. We see buying in gold, silver and palladium.'
Last week's price dip below $1,480 has prompted much fresh buying interest, pushing gold up about $50 over the past four sessions.
Technical analysis remained bullish, suggesting spot gold prices could rise toward $1,550 in the short term, said Reuters market analyst Wang Tao.
A strike at Freeport-McMoRan's massive Grasberg copper and gold mine in Indonesia may extend into next week, if talks with management on Friday do not reach a deal. But so far gold market has shrugged off the news.
'Although gold has resumed its upward trend, the metal has faced increased fundamental headwinds, for instance through a gradual removal of monetary expansion in many nations,' said BofA Merrill Lynch in a research note.
The bank expected limited upside during the summer months but maintained its price target of $1,650 for late 2011, supported by the low real interest rates in key countries such as the United States and central banks buying gold.
Spot silver was flat at $36.39, on course for a 7.2-percent weekly ascent, it best week since end of May.
Spot palladium edged up 0.1 percent to $782.47, poised for a 3.7 percent rise from a week earlier, its second consecutive week of gains.-Reuters