News // Metal market
Gold steady on renewed worries over Ireland
23 November 2010 , 09:28Reuters1866
The uncertainty in Ireland's politics unnerved investors, pressuring the euro and helping the dollar to stand firm.
Ireland begins two nervous weeks of political maneuvering on Tuesday as the government dares the opposition to block an austerity budget on which a multi-billion euro EU/IMF bailout
"The precious metals have good support, as the situation in Europe is still unstable despite the rescue package," said a trader based in Hong Kong. "It has attracted funds in safe-haven buying."
The trader also noted that trading was thin because of a public holiday in Japan.
"Liquidity is going to dry out later this week due to the Thanksgiving holiday in the U.S. But the thin liquidity might exaggerate price moves."
Spot gold edged down 0.4 percent to $1,361.35 an ounce by 0312 GMT. U.S. gold futures gained 0.2 percent to $1,361.2 an ounce.
Spot gold is expected to rally towards $1,380 per ounce as it completed a consolidation between $1,342 and $1,363, and is poised to rise further.
Physical selling around the $1,365 level was spotted in early Asian trade, but overall trade through the physical market was scarce, a Singapore-based dealer said.
"Gold is likely to be rangebound in the near future, with $1,340 being a good support level. The outlook is still firm, as the European debt situation is not very optimistic," said the dealer.
Just before the United States approaches the Thanksgiving holiday later in the week, investors are watching for a batch of data from the U.S. on Tuesday, including preliminary economic growth data for the third quarter.
Also on the radar are the minutes from the Federal Reserve's meeting on Nov 2-3, where the Fed decided to launch its $600 billion bond purchase programme.
"Gold should be able to gradually rise again, after the correction down to the $1,330-level. But a strong rally will be unlikely in the rest of the year, unless Ireland's problem spills over to seriously impact the entire euro zone," said Hou Xinqiang, an analyst at Jinrui Futures.
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