Gold holds near 2-week high after short-covering rally

Singapore (Nov 17)  Gold held near two-week highs on Monday, clinging on to gains from the previous session's short-covering rally, on a softer dollar.

Spot gold held steady at $1,187.20 an ounce by 0724 GMT, after earlier climbing to a two-week high of $1,193.95. That followed a 2.3 percent jump on Friday that took the metal
above a key technical level of $1,180.

The dollar swung wildly against the yen on Monday, initially spiking to a seven-year high after data showed Japan's economy unexpectedly slipped into recession before pulling back as the grim economic news sent Tokyo stocks tumbling. The greenback also eased against a basket of major currencies.
    "A lot of new shorts were put into gold after we broke below
$1,180 and as we came back through it, there was some
short-covering," said a Hong Kong-based trader with a bullion
bank.
    "The $1,180 level is still the one that everyone is looking
at and if we hold that, we could go up to $1,230."
    However, the way higher may not be an easy one for bullion
as the factors that brought down gold in the last few weeks to
its lowest in four-and-a-half-years have not gone away.
    The dollar remains in favour with investors as U.S. data has
been pointing towards a recovery, and the yen and euro have been
weaker against the greenback.
    A stronger dollar and economic optimism could take the
appeal off gold, often seen as an alternative investment to
riskier assets. A robust economy could also prompt the U.S.
Federal Reserve to soon raise interest rates, hurting
non-interest-bearing gold. 
    Bearish sentiment among investors prevailed. Speculators in
gold futures and options slashed their long bets for a third
straight week, according to the Commodity Futures Trading
Commission.
    Hedge fund Paulson & Co maintained its stake in the world's
biggest gold-backed exchange-traded fund, SPDR Gold Trust,
in the third quarter, but legendary investor George Soros has
sharply cut his stake in Barrick Gold Corp and several gold
mining company ETFs.
    Latest data showed that the outflows from the SPDR fund
paused on Friday after eight straight days, but holdings of the
fund remain near six-year lows.

Source: Reuters