Business | Markets
Gold climbs on strong demand
Gold rose in Europe yesterday as strong investor interest in coins and bars and resurgent jewellery demand supported prices after a recent dip. Gold was at $813.10/$814.10 at 1304GMT against $810.70/$811.90 an ounce late in New York on Tuesday, well above the nine-month low of $773.90 it touched on Friday.
- Reuters
- Published: 23:43 August 20, 2008
London: Gold rose in Europe yesterday as strong investor interest in coins and bars and resurgent jewellery demand supported prices after a recent dip. Gold was at $813.10/$814.10 at 1304GMT against $810.70/$811.90 an ounce late in New York on Tuesday, well above the nine-month low of $773.90 it touched on Friday.
"The stability in prices we have seen over the last few days has been enough to ensure a decent uptick in interest from the consumer side," said Daniel Hynes, metals strategist at Merrill Lynch. "We are approaching a seasonally high demand period as well," he added.
Demand for certain finished products is so high that refiners are struggling to keep up, analysts say.
Gold climbed to a one-week high in Asia, pulling other precious metals in its wake, as demand picked up in India, the world's biggest market for gold, and elsewhere on the continent.
Indian buyers are also likely to step up purchases ahead of a series of key religious festivals that culminate in October with Diwali, the Hindu festival of lights. A slightly firmer tone to the dollar, which was regaining some ground against the euro yesterday morning after the previous session's fall, is limiting gold's rise, however.
Oil climbed above $116 a barrel as traders eyed US weekly oil stockpile data due out at 1435GMT for clues as to the future direction of the crude market. Any move in crude prices is likely to impact gold, which is often bought as a hedge against oil-led inflation.
"The consensus is for a build of crude oil inventories but a strong draw of gasoline stockpiles, which already had an impact on oil prices yesterday," said Dresdner Kleinwort consultant Peter Fertig.
"[If] the draw in gasoline inventories remains far below forecasts, crude oil might head towards the $110 a barrel mark, which would be bearish for gold," he added.
The SPDR Gold Trust, the world's largest bullion-backed exchange-traded fund, said it recorded its first outflow in two weeks on Tuesday, as its gold holdings dipped 1 per cent.
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