London 10/04/2012 - Gold prices remained steadier on Tuesday afternoon, as ‘safe-haven’ buying continued to support the marke, although fears about the fragility of the US labour market continued to weigh.

Spot gold, which peaked near $1,655,  was up $6.39 at $1,637.37-1,637.55 per ounce, having erased losses of more than two percent to a three-month low of $1,612.50 seen at one stage last week. 

“Much of the recent caution over gold’s prospects has to do with lowered expectations of global liquidity growth; in particular, a third round of Fed quantitative easing. Our bullish view on gold has always been independent of whether or not QE3 occurs,” Standard Bank, said.

Federal Reserve Chairman Ben Bernanke yesterday said the US economy is "still far from having fully recovered" from the global financial meltdown. This again flashed hopes of additional monetary accommodation, which would be unequivocally bullish for gold because cheap money tends to debase the dollar and create future inflationary risk.

In wider markets the euro was trading at 1.3071 against the US dollar - it had hit an intra-day low of 1.3057 earlier.

Datawise, the US IBD/TIPP economic optimism index came in at 49.3, against a forecast 47.5 points. Wholesale inventories, month-on-month, rose 0.9 percent, against a previous 0.5 percent.

INDIA'S JEWELLERS OPEN FOR BUSINESS

India's jewellers have reopened their shops after being closed for 20 days to protest a government plan to double import duties on gold to four percent. The merchants said that they will not strike again until at least May 11. This is positive for gold demand, considering the Akshaya Tritiya festival begins on April 24.

The Chinese government reported over the weekend that inflation rose at an annual rate of 3.6 percent in March, slightly higher than expected. This lent some support to gold as the yellow metal is often bought as a hedge against inflation.

Gold ETF holdings have risen by 3.7 tonnes or 0.15 percent since end-February. As of April 3, speculative COMEX futures net positions were down 211 tonnes or 28 percent on end-February, at 552 tonnes.

In other news, silver imports into China have fallen by around a third year-on-year (y-o-y), although the country remains a net importer of the metal, Barclays Capital said on Tuesday.

On a product basis, semi-manufactured silver imports continued to decline in February, while silver powder and jewellery imports recovered, although there are still for the year so far.

Among other precious metals, silver fell 43 cents to $31.32-31.36 per ounce - the metal hit its lowest since January 20 at $31.00 per ounce last week.

Elsewhere, platinum fell $24 to $1,582-1,592 per ounce, while palladium, which fell to a three-month trough of $629.10 per ounce last Wednesday, was down $17 to $628.80-633.30 per ounce. 

(Editing by Martin Hayes)

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