Business | Markets
Gold rises to trade in tight range
Gold rebounded yesterday to trade in a tight range after a sharp drop in prices to two-month lows in the previous session encouraged bargain hunters and investors to snap up the metal.
- Agencies
- Published: 00:05 April 3, 2008
London: Gold rebounded yesterday to trade in a tight range after a sharp drop in prices to two-month lows in the previous session encouraged bargain hunters and investors to snap up the metal.
But analysts said the broad commodities sell-off in recent days had damaged near-term sentiment and bullion investors would be cautious in chasing the metal higher ahead of US payrolls data on Friday that could influence the dollar.
"We are trying to recover some ground and may succeed depending on the data releases in the US, but that could be temporary respite," said Tom Kendall, metals strategist at Mitsubishi Corporation.
"It's too early to be wholly convinced that the time is right to go long again for strategic investors. The market needs to steady for a while and it's possible that we will set up a range here between $875 to $900 for a week or two."
Gold hit a high of $894 and was at $888.20/$889.10 at 1440 GMT, against $884.20/$885.40 in New York late on Tuesday, when it fell as low as $872.90.
A decline of three per cent on Tuesday took overall losses to 15 per cent since gold hit a record high of $1,030.80 last month, making bullion attractive for physical dealers.
"Looking ahead, Friday's US non-farm payroll data is set to be an important indicator of the state of the US economy," Standard Bank said in a report.
"A figure much higher than expected could see the dollar extending its recent gains against the euro. However, if it appears that the US is still struggling to create jobs, it could lead to renewed dollar weakness on the back of expectations of further aggressive Fed rate cuts."
The 15-nation euro is rising against the US dollar, after US Federal Reserve Chairman Ben Bernanke warned Congress that the American economy may shrink over the first half of this year, which would signal the start of a recession.
The euro bought $1.5621 in afternoon European trading, up from $1.5601 late in New York on Tuesday. The British pound rose to $1.9816 from $1.9763 on Tuesday, while the dollar rose slightly to purchase 102.20 Japanese yen from 102.04 yen in New York.
Analysts were positive about gold's outlook.
"Gold is looking decent here. I'm not convinced the worst is over for either the credit market crisis or the US economic slowdown," said David Thurtell, metals analyst at BNP Paribas.
"US jobs data will be crucial for the market. Poor numbers would see renewed US dollar weakness and gold may push back over $920," he said.
In other precious metals markets, US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $0.8 an ounce to $888.60. Spot platinum rose 1.6 per cent to a high of $1,948 an ounce before falling to $1,928/$1,938, still up from $1,918/$1,928 on Tuesday, when it fell to a low of $1,888.
Platinum has fallen more than 15 per cent since hitting a record high of $2,290 on March 4 on production problems in South Africa.
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