adminadvantage of the metal’s dip to six-week lows last week to buy into the market.
Comments from Standard&Poor’s that Greece would likely be in default if it follows a debt rollover plan pushed by French banks also stoked lingering concerns over the stability of the euro zone.
Spot gold was bid at US$1 494,21 an ounce, against US$1 485,80 late in New York last Friday. US gold futures for August delivery rose US$12,30 an ounce to US$1 494,90.
Trade is likely to be thinned yesterday by the US Independence Day holiday.
Greece last week approved austerity measures needed for it to access another tranche of funding from the European Union and IMF, sparking a relief rally in some assets seen as higher risk, and weighing on gold. But
the euro’s recovery, and fears that the euro zone debt crisis may have longer to run, have sparked bargain hunting.
“Market players are using the opportunity to get into gold at a cheap price after the sharp fall last Friday,” said Commerzbank analyst Daniel Briesemann.
“The debt crisis in Greece has eased somewhat for the time being, but that does not mean it is solved. The problem is still there – the EU and Greece have only gained some time.”
The euro eased from one-month highs against the dollar after the report from S&P, while the cost of insuring Greek government debt against default rose. It remained a touch higher against the US currency, however. A weaker dollar tends to benefit gold, as it makes dollar-priced commodities cheaper for other currency holders, and boosts the metal’s appeal as an alternative asset. The euro has also drawn support from market expectations that the European Central Bank will raise interest rates at a policy meeting later this week.
Gold has seen some physical buying returning, especially in the major Asian markets, after its dip below US$1 500 an ounce, but this demand has been muted by seasonal factors. Summer is typically a quiet time for gold buying.
“The seasonality of physical demand suggests that gold won’t be able to rely on the same depth of physical interest in July as it could in January,” said UBS in a note.
“We do expect physical buyers to react to lower prices, but don’t expect strong interest until prices get below US$1 480 – as they did briefly on Friday, when our physical sales to India picked up to above-average levels.” India is the world’s biggest consumer of gold.
Data from US futures regulator the Commodity Futures Trading Commission showed last Friday that managed money had sharply cut bullish bets in COMEX gold futures and options as bullion prices tumbled.
Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, fell nearly 78 000 ounces last Friday, data from the fund showed. ETFs, which issue securities backed by physical stocks of a precious metal, have accounted for a significant proportion of gold investment in recent years.
Among other precious metals, silver was bid at US$34,01 an ounce against US$33,94. Spot platinum was bid at US$1 713,80 an ounce versus US$1,734.95, while spot palladium was at US$754,97 an ounce against US$754. – Reuters.
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