London 27/03/2012 - Gold hovered below $1,700 today, still bolstered by Federal Reserve chairman Ben Bernanke's comments on accommodative monetary policy yesterday, while a softer euro capped gains.
Spot gold was last down $3.65 at $1,685.45-1,685.75 per ounce today, stepping back after hitting an intraday high of $1,697.25.
Gold continued to benefit from Bernanke's hints at further quantitative easing, which may be necessary to lower the country's unemployment rate - although this has fallen to 8.3 percent, it remains at high levels.
Additional monetary easing would be unequivocally bullish for gold because cheap money tends to debase the dollar and create future inflationary risk. Moreover, negative real interest rates are also positive for gold - these should persist until the first half of 2013 at least.
Today's US data disappointed. Consumer confidence fell at 70.2 from a previous reading of 70.8 and against a forecast of 70.3, while the Richmond manufacturing index tumbled to 7 against a forecast of 18. Earlier, S&P/CS Composite-20 HPI year-on-year came in as expected at -3.8 percent.
In wider markets, the euro was trading at 1.334 against the US dollar, down from an intraday high of 1.3385.
In Europe, Angel Gurria, the head of the Organisation for Economic Co-operation and Development (OECD), called for the European Stability Mechanism (ESM) to be doubled in size to 1 trillion euros ($1.3 trillion) to prop up the region's struggling economies.
European finance ministers are due to meet this weekend to discuss amalgamating the ESM with the European Financial Stability Facility - German Chancellor Angela Merkel, who had previously resisted moves to boost the European firewall, yesterday endorsed such a move.
But only "the mother of all firewalls" would be enough to restore confidence in the eurozone, Gurria said, according to reports.
Concerns about Indian demand still hang over the market as a strike by jewellers there drags on for an 11th day in protest against the government's doubling of import duties on gold to four percent.
“[But while] Indian demand is an important source of physical demand, focusing only on Indian demand paints the wrong picture,” Standard Bank said. "Despite what seems to be a more general market belief, demand in Asia (ex India) has been quite strong in recent days, particularly South-East Asia."
And physical demand is expected to pick up in April because of the Akshaya Tritiya festival - the second-most important festival for gold buying - at the end of the month.
“We do believe that demand will improve from current levels, especially after missing a good buying opportunity last week. This implies that India may support the market at higher prices than would otherwise have been the case,” Standard Bank added.
Among other precious metals, silver hit a one-week high of $33.09 at one point this morning before settling at $32.71-32.74 per ounce, down seven cents from yesterday’s close.
Elsewhere, platinum rose $3 to 1,650-1,660 per ounce but palladium fell more than $13 to $656.23-660.41.
(Additional reporting by Clara Denina and Kathleen Retourne, editing by Mark Shaw)
| TIME | |||||
|---|---|---|---|---|---|
| Sydney | Tokyo | Ha Noi | HongKong | LonDon | NewYork |
| Prices By NTGOLD | ||
|---|---|---|
| We Sell | We Buy | |
| 37.5g ABC Luong Bar | ||
| 5,226.20 | 4,841.20 | |
| 1oz ABC Bullion Cast Bar | ||
| 4,345.40 | 3,895.40 | |
| 100g ABC Bullion Bar | ||
| 13,909.60 | 12,709.60 | |
| 1kg ABC Bullion Silver | ||
| 1,686.40 | 1,336.40 | |
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