Gold steady on physical buying; decline seen
Singapore, January 6, 2011
Spot gold held steady on Thursday, supported by bargain hunting on the physical market, but optimism spurred by strong US private employment data weighed on sentiment.
Spot gold lost 0.1 percent to $1,375.8 an ounce by 0638 GMT, after falling to a three-week low of $1,363.8 in the previous session. US gold futures gained 0.2 percent to $1,376.6.
The number of US private-sector jobs surged in December at a rate three times stronger than forecast, payrolls processing company ADP Employer Services said on Wednesday.
Private employers added 297,000 jobs last month, the largest gain on ADP records dating to 2000. The ADP report, ahead of government employment data due on Friday, added to growing evidence that recovery in the world's largest economy is shifting up a gear.
"Recent US data has been very positive, weighing on gold prices," said Hou Xinqiang, an analyst at Jinrui Futures in China. "In addition, there hasn't been any new momentum pushing gold above the record level. If we don't see any drastically bad news on the macroeconomic front, gold's performance might be lackluster in the short term."
Spot gold is expected to zigzag down towards $1,355 per ounce, a Reuters market analyst Wang Tao said, adding volatility could be low on Thursday and Friday, with a price band between $1,355 and $1,375, as indicated by a small descending channel.
But the downside was limited by bargain hunting on the physical market, dealers said. "We see very good physical demand help pushing gold from below $1,370 to the current level," said a Hong Kong-based dealer. - Reuters