Gold steady amid rally in shares
Analysts say bullion may get back on its way to $1,300
Seoul : Gold traded little changed after earlier losing as much as 0.2 per cent as a rally in equities eroded demand for the precious metal as a store of value.
Gold for immediate delivery was little changed at $1,255.82 an ounce at 4:03 p.m. Seoul time. Yesterday the price climbed to as high as $1,262.45, 0.2 per cent from a record reached in June. December-delivery futures were also little changed at $1,257.90 an ounce after losing 0.3 percent intraday in New York.
"Stocks rose, prompting some selling for gold," said Chris Yoo, head of the overseas derivatives team at Samsung Futures Inc. in Seoul. "But this will be just a small correction and bullion may get back on its way to $1,300 down the road," he said.
US stocks advanced yesterday, sending the Standard & Poor's 500 Index higher as concern eased that Europe's sovereign debt problems will slow the global economic recovery. Asian stocks gained today, driving the MSCI Asia Pacific Index higher for the first time in three days.
Moderate pace
A report yesterday from the Federal Reserve showed "economic growth at a moderate pace" at five regional banks, while two pointed to "positive developments or net improvements." The remaining five banks said conditions were mixed or decelerating.
The report underscores the Fed's view that while the recovery from the worst recession in seven decades has cooled, the economy isn't relapsing into a contraction. In a speech last month in Jackson Hole, Wyoming, Fed chairman Ben S. Bernanke said "the preconditions for a pickup in growth in 2011 appear to remain in place."
Bullion has jumped 14 per cent this year and is set for a 10th annual gain as investors seek protection against financial turmoil in Europe and the prospect of slowing economic growth.
UBS AG yesterday increased its one- and three-month gold forecasts to $1,300, from $1,230 and $1,200 respectively, citing the re-run of concerns over European sovereign debt as well as a pickup in seasonal demand for the metal.
Gold is "now within striking distance of its $1,265 all- time high from June," UBS analyst Edel Tully said yesterday in the report. "Along with the sovereign premium that is starting to creep into the gold, seasonality is also helping."
The euro declined versus the dollar and the yen after FT Deutschland reported European Central Bank Executive Board member Juergen Stark as saying German banks need more capital.
