Gold Steadies and Waits for Direction

2010-JUL-16

From the GoldMoney News Desk --

Gold has held relatively steady throughout this week in a range between $1,200/oz to $1,220 from Tuesday to Friday. The yellow metal, when priced in U.S dollars, seems to be lacking direction. However, due to high volatility in currency markets, gold priced in GBP and EUR has been falling (£780/oz and €929/oz at time of writing) as the dollar looses ground.

Gold slipped initially on Monday as risk aversion fell after a quiet weekend. The BIS (Bank of International Settlements) annual report on Monday showed a total of 346 tonnes of gold swaps in recent months, prompting different reactions from analysts. Some traders considered that this build up of gold could force the price down, but most agreed that the figures simply showed an awakening in the markets with regard to investment uses for gold. Philip Klapwijk of GFMS told Reuters: “Here we have gold being used quite creatively. That is in a sense a validation again of gold’s centrality to the financial system.”

On Tuesday, rating agency Moody’s downgraded Portugal to “A1 with a stable outlook”. The decision was not exactly a surprise to the markets, but it did serve to remind people of the ongoing debt crisis, pushing gold up.

China released weaker than expected GDP figures on Thursday this week, suggesting slower growth. Even though this does represent a slow-down, the figures are still relatively good (10.3% in the last quarter) and many analysts still expect Chinese demand for gold to be high.

Also on Thursday the Philadelphia Federal Reserve reported weaker-than-expected data on business conditions, suggesting further action will be needed to keep the U.S. recovery going. While this news would normally be positive for gold, this week precious metals were sold as traders made losses on falling stock markets. On the FX markets the dollar fell against a basket of currencies making gold cheaper for buyers outside America.

Silver fell below $18.00/oz on Monday but soon recovered to spend the rest of the week around $18.20.

Platinum fell this week to a low of $1,501/oz early on Tuesday but recovered later in the week to around $1,520. Palladium was relatively stable this week suffering only a slight dip on Monday, and later in the week consolidating around $460/oz.

All data and quotes sourced from Reuters.