SINGAPORE, Oct 19: Gold gave up early gains on Friday as shares in Asia slipped following a three-day rally and investors took a breather ahead of the outcome of a euro zone summit to solve the region’s debt crisis, which could offer support to the euro.
Recent stimulus measures by central banks boosted gold’s appeal as a hedge against inflation and sent prices to an 11-month high of $1,795.69 an ounce in early October, but a rebound in the dollar and uncertainty in Europe later trimmed the gains.
Gold hit an intraday high around $1,743 an ounce but slipped to $1,736.99 by 0259 GMT, down $4.10, as it headed for its second weekly fall. The metal struck a lifetime high around $1,920 in September last year.
‘There’s some disappointment after (gold) could not pass through $1,754 to $1,755. And then a stronger dollar dragged down the market,’ said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that dealers also awaited the outcome of the euro zone summit.
‘I think gold just follows the U.S. Dollar. At $1,700, it seems quite a number of people want to buy at this level.’
Bullion has closely followed moves in currencies, with improving sentiment around the euro zone giving support to the euro and weighing on the dollar, making dollar-priced commodities more attractive for buyers holding other currencies.
U.S. Gold for December delivery fell $6.30 an ounce to $1,738.40.
European Union leaders took a big stride towards establishing a single banking supervisor for the euro zone, striking a deal under which the bloc’s rescue fund could start recapitalising ailing banks next year, a French government source said.
Creating an effective banking union, towards which this deal was a first step, is regarded by the International Monetary Fund and market economists as a key tactic in overcoming the euro zone’s three-year-old debt crisis.
In other markets, the MSCI index of Asia-Pacific shares outside Japan eased 0.3 percent after rising 1 percent for a seven-month high, posting its biggest daily gain in three weeks, on Thursday.
The dollar index slipped but was off a one-month low against a basket of major currencies.
The physical gold market was subdued on Friday, with premiums unchanged at between 50 and 90 cents to the spot London prices in Hong Kong and dealers waiting for India to resume buying.
‘Gold could see a seasonal up-tick in demand from India going into the festival season, but it is likely to be more subdued than previous years unless the Indian rupee appreciates,’ said ANZ in a report.
The festival season is underway in India, the world’s largest gold consumer, and will peak with Diwali and Dhanteras next month. Weddings also take place during this period.
(agencies)
Trending Now
E-Paper
Follow our WhatsApp channel