Gold extended gains on
Tuesday, with the dollar dropping after disappointing U.S. data
stoked concerns about a patchy recovery in the world##Q##s largest
But investors were loth to build positions too much ahead of
payrolls data on Friday, which will shed more light on the
strength of the U.S. pickup.
Gold hit an intraday high of $1,603.60 an ounce and
was steady at $1,599.20 by 0655 GMT. It rallied to a 1-month
peak in March on worries about fiscal stability in Europe, as
politicians scrambled to clinch a bailout for Cyprus.
"I think sentiment is neutral. (Gold) can##Q##t break through
$1,620-$1,625, but on the downside, we can say $1,590-$1,585
seems to be the floor," said Ronald Leung, director of Lee
Cheong Gold Dealers in Hong Kong.
"I think the U.S. economy will still continue to recover.
The economy in the U.S. is still improving - of course,
sometimes the pace is fast, sometimes it##Q##s slow."
U.S. factory activity grew at the slowest rate in three
months in March, indicating the economy lost some momentum at
the end of the first quarter.
But other recent data pointing to a strengthening economy
has helped push stocks to record highs on both the Dow and S&P
500. In theory, strong stock markets should prompt investors and
speculators to ditch gold and shift to equities.
U.S. gold for June was at $1,599.80 an ounce, down
$1.10 after hitting a high of $1,604.30.
"Offering some support going forward, is the renewed turmoil
in Europe in the wake of the Cyprus debacle and the Italian
political stalemate, coupled with the fact that budget
uncertainties in the U.S. and the debt ceiling debate remain
unresolved," INTL FCStone said in a monthly report.
"We see these crosscurrents in place for a little while
longer and expect a trading range market in gold of roughly
$1,560-$1,635 over the next month."
The yen rose to a one-month high against the dollar as the
U.S. data prompted investors to sell the greenback, while
Japan##Q##s Nikkei stock average fell 1.1 percent to a nearly
four-week low on Tuesday.
The firmer Japanese yen dragged down gold contracts on the
Tokyo Commodity Exchange (TOCOM), with no signs of
buying related to tensions in the Korean peninsula.
Gold bars remained on par with spot London prices in Tokyo.
Premiums for gold bars were little changed in Singapore and Hong
Kong at $1.20 to $1.50 an ounce to spot London prices.
"We saw buying interest from the general public on TOCOM
this morning, but then it disappeared. They don##Q##t want to buy or
sell because of the matters concerning North Korea," said a
dealer in Tokyo.
"But of course if North Korea decides to use nuclear
weapons, then it will affect the market big time."
The United States has positioned a warship off the Korean
coast as a shield against ballistic missile attack as South
Korea##Q##s new president vowed swift retaliation against a North
Korean strike amid soaring tensions on the peninsula.
Precious metals prices 0655 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1599.20 0.80 +0.05 -4.50
Spot Silver 27.98 -0.03 -0.11 -7.60
Spot Platinum 1587.00 -3.59 -0.23 3.39
Spot Palladium 771.00 -8.00 -1.03 11.42
COMEX GOLD JUN3 1599.80 -1.10 -0.07 -4.54 12006
COMEXSILVER MAY3 27.95 0.01 +0.02 -7.54 4003
COMEXgold and silver contracts show the most active months