London 05/04/2012 - Gold ticked higher on Thursday afternoon on opportunistic buying and short-covering ahead of the long Easter weekend.

Spot gold gained $8.20 at $1,631.70-1,631.90 per ounce, having hit a three-month low of $1,612.50 in the previous session, when the metal was caught in cross-asset selloff after the latest FOMC minutes dampened hopes for further economic stimulus.

The US Fed reiterated that more monetary injection would only be needed if the economy worsened. Only two out of the 10 voting members supported a third round of quantitative easing (QE3) to stimulate the US economy, which, they agreed, was moderately improving. 

Gold slumped on the news - QE3 would be bullish for the yellow metal by devaluing the dollar - but the market has since steadied, with buyers attracted by the lower prices and traders squaring their books ahead of a long holiday weekend in Europe and the US.

Nevertheless, there are still too many “shaky hands” in the market that need to be flushed out if the mood sours, Commerzbank warned.

“If sentiment among market players does not improve, we would not rule out the possibility of gold dipping below the $1,600 mark. That said, this price level would no doubt spark increased buying interest, which should prevent any sharper fall,” the broker said.

In wider markets, the dollar climbed by about a cent to 1.3060 against the euro after Spanish 10-year yields blew out to 5.80 percent, the highest level since the EBC launched its longer-term refinancing operation (LTRO) in December.

In India, finance minister Pranab Mukherjee will meet the heads of the country's jeweller associations tomorrow. The country is still largely absent from the market - jewellers across the country have decided to extend a strike in protest against higher gold import duties proposed by the government last month.

“In Asian markets, interest in precious metals remained severely lacking, with the lower price levels even failing to attract significant physical buying. Nevertheless, there was enough interest again (as there was the previous day) to keep prices relatively stable,” Standard Bank said.

Lower prices may stimulate some buying in India where the Akshya Trithya festival - an auspicious time for buying and gifting gold - takes place later this month.

In other news, the Stock Exchange of Thailand (SET) will introduce a new gold exchange-traded fund (ETF), the fifth to be listed there, on April 11.

Among other precious metals, silver gained 34 cents to $31.73-31.77 per ounce after falling to its lowest since January 20 at $31.00 in the previous session.

Elsewhere, platinum was down $6 to $1,601-1,610 per ounce - the metal fell below $1,600 for the first time since February 1 at $1,593.40 in the previous session.

Palladium gained $1 from yesterday’s close and is was last at $639-645 per ounce.


(Additional reporting by Tom Jennemann, editing by Mark Shaw)

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