Gold trades below six-week highs, trapped in rangeadmin
Gold eased to trade around $650 an ounce on Thursday after a failed attempt to breach six-week highs, with the metal trapped by bargain-hunters and profit-takers in the absence of clear market direction.
But prices remained higher from the previous close in the U.S. market as high oil prices, increased tension in the Middle East and a drop in the dollar spurred some investors to add positions, dealers said.
“With the resistances in the $650-$655 band seemingly stubborn given gold’s failure to hold on gains yesterday, the recent surge in prices could come under some corrective pressure, once the immediate reaction to the security worries wanes,” Standard Bank said in its daily report.
Gold rose as high as $653.80 an ounce before falling to $650.00/651.00 by 1010 GMT, still above $647.80/649.30 an ounce late in New York on Wednesday, when it surged to $655.30.
Some dealers said investors were keen to take profits since gold prices had rebounded from a three-month low of $543 in mid-June. Gold hit a 26-year high of $730 in mid-May.
But Iran’s nuclear stand-off with the West, recent North Korean missile tests launches, and the conflict between
Israel and Hizbollah guerrillas in Lebanon would elevate gold’s safe-haven appeal, they said.
NO BIG SELL OFF
“It’s hard to sell heavily into this market looking at what’s going on at the moment. If we continue to see an escalation in violence around the world, prices will go up still,” said a precious metals dealer in London.
“I am looking for a move lower, if the political situation calms down,” he added.
Dealers said they also would watch the currency and oil markets for leads.
Oil surged to record highs near $76 a barrel, while the dollar hit the day’s lows against the euro.
A weak dollar makes gold cheaper for holders of other currencies, but the metal has not strictly followed the inverse relationship in the recent past.
“The market remains volatile, swinging between bargain hunting and profit taking,” said Julia Hamblett, vice president at Dresdner Kleinwort.
But despite two-way movements in gold prices, analysts remained bullish on the prospects of the metal going forward.
“Longer term positive drivers are still in place and we expect gold to end the year close to $700 once more,” said J.P. Morgan said in a report.
In other metals, platinum fell to $1,248/1,253 an ounce from $1,252/1,257 in New York, while palladium was flat at $325/330.
Silver inched up to $11.57/11.67 an ounce from $11.52/11.62 late in New York.