London: Gold prices edged higher on Thursday, recovering from the previous day’s two-week low in line with stock markets and other commodities, but uncertainty over when Spain would request a rescue programme limited investors’ confidence.
European shares recovered some ground lost after fierce protests in Spain and Greece against austerity measures roiled markets on Wednesday, while oil prices firmed and the dollar took on a slightly weaker tone.
Spot gold was up 0.2 per cent at $1,755.69 an ounce at 0952 GMT, while US gold futures for December delivery were up $5.00 an ounce at $1,758.60.
The precious metal is on track to end September with its largest quarterly gain in more than two years, of nearly 10 per cent, after the Federal Reserve unveiled a third round of bullion-friendly monetary stimulus measures earlier this month.
Gold fell sharply on Wednesday as worries over the euro zone debt crisis, which pressured the euro, prompted some investors to cash in gains ahead of quarter-end. It later recovered some ground, but remained down 0.5 per cent on the day.
“Short term, I think we’ll see more consolidation. We’ll have to see how the dollar performs,” Credit Agricole analyst Robin Bhar said. “As we’ve seen in the last 48 hours, the crisis in Europe has resurfaced.”
“If it comes back with a vengeance, the euro will stay weak, the dollar will stay strong, and that’s going to cap the gold price,” he said.
Spain is set to present its 2013 budget draft later on Thursday. A credible budget combined with comprehensive structural reforms could build the foundation for meeting conditions for a Spanish aid package and intervention by the European Central Bank in the bond market, analysts said.
Spanish government bond yields were stable as uncertainty over whether the troubled country would ask for a bailout kept investors edgy ahead of the unveiling of its budget.
“After the events of the last 24 hours, where Spanish police fired rubber bullets and used batons on austerity protestors, Spain’s politicians need to draw the sting from further political unrest today while at the same time satisfying the EU that any new budget agreed for 2013 is credible,” CMC Markets said in a note.
