Gold slips on Europe debt concerns
Friday, 6 January 2012
LONDON, Jan 5 (Reuters) - Gold slipped on Thursday, hit by a weak euro on escalating concerns about the euro zone debt crisis, although losses were limited as rising tensions between Iran and western countries helped fuel some safe-haven buying.
Spot gold slipped 0.1 percent to $1,608.80 an ounce by 1144 GMT from $1,610.60 late in New York on Wednesday, giving up gains from earlier in the session when the precious metal hit a two-week intraday high.
U.S. gold slipped 0.2 percent to $1,609.40 an ounce. "Gold is not able to go much higher because the dollar is up, but at the same time we have the uncertainties from the oil market ... which should be lending a hand," Saxo Bank senior manager Ole Hansen said.
"We may need to see a bit more stabilisation in prices before the market starts to look towards more gains."
The euro dropped to a 15-month low against the dollar as signs of weakness in euro zone banks highlighted the extent to which they are suffering from the deepening debt crisis.
A strong dollar makes dollar-priced commodities more expensive for holders of other currencies.
French borrowing costs rose slightly when the euro zone's second-largest economy sold debt for the first time this year on Thursday, but demand was solid despite concerns the country could lose its AAA credit rating.
The market is now set to focus on debt sales from Spain and Italy next week to gauge the appetite for peripheral euro zone debt in the wake of the region's growing crisis.
Meanwhile, growing tension between Iran and Washington and its allies over Iran's nuclear programme have heightened political uncertainty in the region, helping fuel the appetite for gold as a safe haven and lending support to crude prices.
Gold demand usually picks up ahead of the Lunar New Year, which falls on Jan. 23 this year, in China and elsewhere in Asia, traders said.
"We are seeing Chinese banks on the bid ahead of the Chinese New Year," a Singapore-based trader said.
Physical dealers in Hong Kong reported purchases from funds, albeit in small volumes, and supply is likely to improve next week as refineries resume operations after the New Year break.
Exchange-traded funds, however, have yet to see a pick-up in investment interest. Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, remained unchanged at 1,254.57 tonnes for the seventh session.
Investors are also likely to watch for further evidence of the pace of economic recovery in the United States, with the ADP national employment report due later Thursday ahead of the key non-farm payrolls report Friday.
Spot gold slipped 0.1 percent to $1,608.80 an ounce by 1144 GMT from $1,610.60 late in New York on Wednesday, giving up gains from earlier in the session when the precious metal hit a two-week intraday high.
U.S. gold slipped 0.2 percent to $1,609.40 an ounce. "Gold is not able to go much higher because the dollar is up, but at the same time we have the uncertainties from the oil market ... which should be lending a hand," Saxo Bank senior manager Ole Hansen said.
"We may need to see a bit more stabilisation in prices before the market starts to look towards more gains."
The euro dropped to a 15-month low against the dollar as signs of weakness in euro zone banks highlighted the extent to which they are suffering from the deepening debt crisis.
A strong dollar makes dollar-priced commodities more expensive for holders of other currencies.
French borrowing costs rose slightly when the euro zone's second-largest economy sold debt for the first time this year on Thursday, but demand was solid despite concerns the country could lose its AAA credit rating.
The market is now set to focus on debt sales from Spain and Italy next week to gauge the appetite for peripheral euro zone debt in the wake of the region's growing crisis.
Meanwhile, growing tension between Iran and Washington and its allies over Iran's nuclear programme have heightened political uncertainty in the region, helping fuel the appetite for gold as a safe haven and lending support to crude prices.
Gold demand usually picks up ahead of the Lunar New Year, which falls on Jan. 23 this year, in China and elsewhere in Asia, traders said.
"We are seeing Chinese banks on the bid ahead of the Chinese New Year," a Singapore-based trader said.
Physical dealers in Hong Kong reported purchases from funds, albeit in small volumes, and supply is likely to improve next week as refineries resume operations after the New Year break.
Exchange-traded funds, however, have yet to see a pick-up in investment interest. Holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, remained unchanged at 1,254.57 tonnes for the seventh session.
Investors are also likely to watch for further evidence of the pace of economic recovery in the United States, with the ADP national employment report due later Thursday ahead of the key non-farm payrolls report Friday.