Gold rose further on Wednesday and held above $622
Gold rose further on Wednesday and held above $622 an ounce as the U.S. dollar fell against the euro, but traders expect the metal to be confined to tight ranges ahead of the year-end holidays.
"It's likely to be holding somewhere in the region of between $610 and $640 an ounce," said Craig James, chief economist at Commonwealth Securities in Sydney.
"That's a fairly wide trading range in a short space of time, but gold has been very volatile and has moved very much in line with the greenback, and also with oil prices," he said.
Spot gold hit an intraday high of $622.85 an ounce, higher than $621.70/623.20 late in New York on Tuesday, when it gained around 1 percent following a drop in the dollar against the euro and surprising gains in U.S. producer prices.
"What we are likely to see is investors are looking forward into 2007 seeing slower economic growth in places like the U.S. and Japan, less inflationary pressure," said James.
"We also believe the oil price is likely to be very much contained about $62 a barrel. If that's the case, we do see inflationary pressures ease and oil prices remain stable. That means gold is going to track more sideways rather than anything else," he said.
The new benchmark gold futures contract on the Tokyo Commodity Exchange, December 2007, was at 2,393 yen ($20.24) per gram. It started trading at 2,391 yen.
The physical sector was mostly quiet in Asia as jewellers watched the volatile price. Buying emerged on Monday, when gold dropped to its lowest since Nov. 1 around $611 an ounce on a firmer dollar.
Dealers said Japanese investors, who helped gold reach multi-year highs, stayed away from the metal and shifted some of their money into the stock market, where the Nikkei average inched back towards seven-month highs hit on Monday.