Gold eases after four-day rally, firm dollar hurts
Singapore, July 24, 2013
Gold slipped on Wednesday as investors took profits after a sharp four-day rally pushed prices up to a one-month top in the previous session, while a firm dollar also hurt sentiment.
Bullion added nearly 6 per cent in the past four sessions -- biggest such rise since October 2011 -- as receding worries of an imminent cut to the US Federal Reserve's stimulus burnished the precious metal's appeal as a hedge against inflation.
The Fed has said it will only start phasing out its stimulus once it is sure the economy is strong enough to stand on its own.
Spot gold dropped 0.6 per cent to $1,339.54 an ounce by 0405 GMT, after rising to a one-month peak on Tuesday as speculators bought back bearish bets ahead of an option expiry later this week.
"The selling interest is prompted by profit taking," said Peter Fung, head of dealing at Hong Kong's Wing Fung Precious Metals. "Prices could range between $1,330 and $1,350 today."
Weak data from China dragged on sentiment across financial markets, while a dollar recovery hurt assets priced in the greenback by making them more expensive for holders of other currencies.
Activity in China's manufacturing sector slowed to an 11-month low in July, a preliminary survey showed, suggesting the world's No.2 economy is still losing momentum.
"Prices are far off from the next level of resistance at $1,370, and we expect the positive momentum to taper today," Phillip Futures analysts wrote in a note.
Comex gold gained about $5 to $1,339.60, after a small decline in the previous session. Silver, platinum and palladium tracked gold lower.
Dealers say physical demand has largely held up.
"We thought demand would drop as prices rose, but looks like consumers like the price stability," said one dealer in Singapore.
Premiums in Hong Kong, a key supplier to China, were stable at $5 an ounce to London spot prices, Fung said.
Demand in top buyer India, however, is expected to be slow as the government implements new rules to curb imports and reduce its current account deficit.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 per cent to 929.76 tonnes on Tuesday. - Reuters