London: Gold snapped a two-day losing streak on Tuesday as the market continued to monitor international political tensions, but gains were kept in check by a steadier dollar and buoyant equities after upbeat US
data.
Palladium steadied near a 13-year high of $900 an ounce hit in the previous session, supported by worries over supplies from top producer Russia and strong demand prospects.
Prices were up 0.3 per cent at $891.50.
“The palladium market is likely to pause today but fundamentally it’s a good story, with automotive demand pretty healthy in China and the United States ... you also have decent supply story ... the sanctions scare in Russia,” VTB Capital analyst Andrey Kryuchenkov said.
Russia may tighten retaliatory sanctions against Western nations to include a ban on car imports, if the United States and the European Union impose additional sanctions on Moscow over the Ukraine crisis.
Spot gold rose 0.2 per cent to $1,300.20 an ounce by 0956 GMT. The metal traded in a small $4 an ounce range, indicating low volumes.
US gold futures for December delivery were up $1.80 an ounce at $1,301.10.
“We are still trading in small ranges as there’s hardly any volume,” Kryuchenkov said. “As far as the market is concerned, risk sentiment has improved somewhat, so we will still be paying attention to developments in Iraq and Ukraine as well as the US inflation report later today.” Investors continued to keep a close eye on Ukraine.
Government forces reported new advances overnight, after a weekend breakthrough when troops raised the national flag in Luhansk, a city held by pro-Russian separatists since fighting began in April.
Tensions in Ukraine and the Middle East have largely contributed to gold’s near 8 per cent gain this year, igniting bouts of demand when investors turned to assets perceived as an insurance against risk. However, any impetus that these events have provided has not lasted long, analysts said.
Gold’s upside however remained fragile as equity markets rose after upbeat US housing data on Monday, a further sign that the world’s largest economy is on the path to recovery.
The dollar was up 0.1 per cent against a basket of main currencies ahead of the annual meeting of central bankers in Jackson Hole, Wyoming, on Thursday, which includes a speech on Friday from Federal Reserve chief Janet Yellen that could give clues on the timing of any rate rise.
The US central bank is expected to raise rates in the middle of next year, depending on the strength of the economy.
Higher interest rates would encourage investors to withdraw money from non-interest-bearing assets such as gold.
The market will also monitor US consumer prices data for July due later on Tuesday.
“Traders will be watching eagerly later in the week at the FOMC minutes and Jackson Hole address to gauge any clues to the timing of a Fed rate hike,” MKS said in a note. “Any major developments at these events could provide the catalyst to tease gold out of the monotonous $1290-1320 range we have traded over the past 2 months.” The metal gained some support from news that holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 2.09 tonnes to 797.69 tonnes on Monday, the first inflow in nearly four weeks.
Among other precious metals, silver was down 0.1 per cent at $19.62 an ounce after falling to a two-month low in the previous session. Platinum fell 0.1 per cent to $1,439 an ounce.
