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Gold inches up on weak dollar with eyes on ECB

Gold inches up on weak dollar with eyes on ECB

 

* ECB to launch second 3-year financing operation on Wed * Gold-silver ratio drops to four-month low * Spot gold may rise to $1,797/oz -technicals * Coming up: U.S. consumer confidence, Feb; 1500 GMT SINGAPORE, Feb 28 (Reuters) - Gold inched higher on Tuesday after two sessions of straight losses, ahead of a major cash injection by the European Central Bank expected later this week, and a weaker dollar lent support. Gold prices climbed about 3 percent last week, as the Greece bailout deal and expectations of more monetary easing by key economies inspired gold bugs, but the momentum fizzled after gold hit a three-month high and failed to breach a key technical level. The expectations of another batch of three-year, ultra-cheap loans offered by the ECB on Wednesday, which could fuel risk appetite, warmed market sentiment to a quiet simmer, helping Asian equities as well as the euro. The greenback inched down against a basket of currencies , drawing buyers holding other currencies to dollar-denominated commodities. "As long as central banks around the world lean towards further easing, gold will rise further, although $1,800 will be a key resistance level for the time being," said Li Ning, an analyst at Shanghai CIFCO Futures. Li said gold could face short-term correction after the attempt to breach the $1,800 level failed, but $1,750 should provide firm support. Spot gold edged up 0.3 percent to $1,771.96 an ounce by 0643 GMT, off a three-month high of $1,787.11 hit last week. U.S. gold was little changed at $1,773.80. Technical analysis suggested that spot gold could rise towards $1,797 an ounce during the day, Reuters market analyst Wang Tao said. GOLD-SILVER RATIO The gold-silver ratio, a gauge of how many ounces of silver can buy an ounce of gold, dropped to just above 49, its lowest in about four months, as silver led the precious metals complex with a dazzling 28-percent year-to-date rally, compared with gold's 13-percent gain. Spot silver gained 0.4 percent to $35.49 an ounce, and has the potential to rise further if risk appetite continues to improve, traders said. Oil prices dipped for a second straight session, snapping a recent surge that aided gold prices, while concerns over supply from the Middle East are expected to stem the slide. Bullion prices have been supported by inflation concerns triggered by higher oil prices, but an analyst at INTL FCStone, Edward Meir, warned that rising crude could also hurt precious metals by nipping the fragile global recovery. "The soaring cost of energy, while not necessarily being bearish for gold on the surface, has the potential to hurt the precious metals group should it start to destabilise other markets, like US equities," he said in a research note. In Asia's physical gold market, buying interest remained sluggish out of China, while some scrap flow continued in Southeast Asia, dealers said. "If we stay on this level, there won't be much interest," said a Hong Kong-based dealer, adding that premiums on gold bars stood around $1-$1.50 an ounce above London prices. Spot platinum was little changed at $1,702.74 an ounce, on course for a fourth consecutive session of decline, after South Africa's National Union of Mineworkers urged its members to accept an offer by Impala Platinum to rehire miners at its Rustenburg operation, the scene of a violent, illegal strike. Precious metals prices 0643 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1771.96 5.47 +0.31 13.31 Spot Silver 35.49 0.13 +0.37 28.17 Spot Platinum 1702.74 1.25 +0.07 22.24 Spot Palladium 698.78 -2.94 -0.42 7.09 COMEX GOLD APR2 1773.80 -1.10 -0.06 13.21 11258 COMEX SILVER MAR2 35.51 -0.02 -0.05 27.19 3722 Euro/Dollar 1.3437 Dollar/Yen 80.52 COMEX gold and silver contracts show the most active months 
										
					
									

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