Gold near 11-week high, physical demand quiet
SINGAPORE (Aug 27) Gold was trading near 11-week highs on Tuesday on hopes of prolonged U.S. monetary stimulus measures but traders said the rebound in prices was hurting physical demand. Gold rose to $1,406.04, its highest since June 7, in early Asian trading, supported by weak U.S. durable goods data. Some profit taking kept prices below $1,400 for a while. "It's quite risky to build on any fresh positions from here, so people are just taking profits," said one Hong Kong-based trader. "Physical demand is very quiet at these levels and not strong enough to support prices. If we cannot hold and stay above $1,400 by the end of the week, it's a very bearish situation for gold technically." Spot gold dropped 0.1 percent to $1,402.71 an ounce Gold has gained more than 6 percent this month and almost 19 percent from its year-low of $1,180.71 hit in late June. Recent U.S. data on industrial production, new home sales and durable goods orders have suggested economic growth this quarter will probably not accelerate as much as economists had hoped. Traders believe the weak data could deter the Federal Reserve from tapering its stimulus, a process economists had largely expected to start from next month. The Fed's $85-billion-a-month bond purchases have helped drive increased liquidity towards gold and other commodities.
PHYSICAL DEMAND WEAK Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices. India is considering asking gold traders to provide proof of payment for their jewellery exports, trade body officials said on Monday, a move which may further tighten supplies in the world's top bullion buyer. Imports have come to standstill since July 22, when the Indian central bank issued a rule tying imports to exports, in a bid to reduce its trade deficit. Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's levels above $20.
Precious metals prices 0800 GMT
Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1402.71 -1.69 -0.12 -16.23 Spot Silver 24.12 -0.15 -0.62 -20.34 Spot Platinum 1539.88 0.03 +0.00 0.32 Spot Palladium 743.50 -0.50 -0.07 7.44 COMEX GOLD DEC3 1403.20 10.10 +0.73 -16.27 30277 COMEX SILVER SEP3 24.15 0.14 +0.58 -20.31 12087 Euro/Dollar 1.3377 Dollar/Yen 97.83
