WELLINGTON - Gold pared early losses and moved into positive territory in late Asian trading Tuesday but investors continue to remain cautious ahead of a crucial meeting of European policy makers Wednesday on measures to contain the region's debt crisis.
"Trading has been quiet and we are all waiting for positive news from Europe," said Ronald Leung, director of Lee Cheong Gold Dealers Ltd. in Hong Kong. At 0514 GMT, spot gold was at $1,657.10 a troy ounce, up $3.80 from its previous close. Earlier in the session, spot gold slipped to the session's low of $1,643.50/oz, on profit taking, traders said.
"Physical demand has not been much in Asia, except in India," Leung said, noting that premiums were ranging between $2-$3/oz.
"Good news emanating out of the euro-zone and a rally in the euro should push gold higher in-line with its recent strong correlation to other riskier assets and outweigh any selling due to a diminished fear factor and its role as an anti-risk asset," Credit Agricole analyst Robin Bhar said. Meanwhile, at the Commonwealth Heads of Government meeting in Perth, Chief Executive Mark Cutifani of gold miner AngloGold Ashanti Ltd. (AGG.AU), told reporters that gold prices may eventually breach $2,200/oz level on continued global economic uncertainty.
High gold prices have prompted some investors to buy silver coins and bars instead, during the festive season when bullion purchases are considered auspicious.
"Silver is now becoming common man's gold, because of high (gold) prices," Ketan Shroff, director at Pushpak Bullions Pvt. Ltd., said. He estimated that sales of silver coins and bars during this festive season, which started earlier this month, is higher by 30%-40% in value-terms compared to last year.
At 0514 GMT, spot silver was at $31.73/oz, down 1 cent. Platinum was at $1,555/oz, up $10, and palladium was at $644/oz, up $5 from its previous close.
Based on Commodity Futures Trading Commission data, Standard Bank analyst Marc Ground said that there is an improvement in net speculative length over the past week, which was due to increase in speculative long positions, or bets that prices will rise, and a decline in short positions, or bets that prices will fall.—Agencies
"Although encouraging, there is still some way to go before we would feel that the speculative market is now convincingly more confident on palladium," Ground said.
In spot platinum, Standard Bank analyst Dan Smith said he expects the losses to extend.
"Spot platinum prices are expected to continue to press to lower levels as another bear flag pattern unfolds," Smith said.
