Gold price steadies as buyers cash in on previous gains
London (Jan 14) Gold steadied on Thursday as buyers cashed in some of the previous session’s gains, but the metal remained underpinned by positive pressure from a drop in stock markets and dollar weakness.
Stocks fell in Europe and Asia on Thursday following steep losses on Wall Street, after volatility in Chinese stocks early in the year battered appetite for risk.
That helped send gold prices to two-month highs at $1,112 last week, though it weighed on prices of crude oil and industrial metals. Gold trading has since been choppy.
Spot gold was $1,092.10 an ounce at 10.20 GMT, little changed from $1,093.11 late on Wednesday, while US gold futures for February delivery were up $4.80 an ounce at $1,091.90.
"It’s more the safe-haven buying that’s going to be driving gold, especially with the Chinese equities issue, and the tensions between Iran and Saudi," the head of commodities strategy at ING, Hamza Khan, said. "Out of the bundle (of commodities), gold could be the (outperformer) in 2016."
The world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, reported a 2.4-tonne rise in its holdings on Wednesday, bringing its total inflow for the year to 11.7 tonnes.
Benchmark Brent crude futures slid to their lowest level since February 2004 on Thursday, as the prospect of more oil supplies from Iran added to gloom over a world already awash with supply, and concerns about global economic growth.
That helped depress longer-term inflation expectations, strength in which can lift gold prices.
Chicago Federal Reserve Bank President Charles Evans said he was nervous about the potential effects of China’s slowdown on the US economy and about the possibility that inflation expectations may be slipping.
The Fed raised US interest rates in December and attention has shifted to how many increases will follow in 2016. Rate hikes typically lower demand for noninterest-paying gold while boosting the dollar.
"We are still somewhat stuck for the time being, with not enough interest or buying to conclusively hold above $1,100, but with few participants wanting to aggressively short the market in the light of current conditions in the stock markets and China," Marex Spectron said in a note.
"So for the short term, I would look to trade a $1,080/$1,100 range in the absence of any outside news or influences."
Among other precious metals, palladium was down 0.9% at $480.97/oz and silver was flat at $14.13/oz.
Source: bdLive.za
