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News // Metal market

Gold bounces from lows

29 November 2010 , 11:37Reuters2332

Investors also closely watched an escalating tension in the Korean peninsula, although dealers said there were no signs of buying related to the crisis sparked by North Korea's artillery attack on a South Korean island.

Spot gold added 73 cents to $1,362.46 an ounce by 0628 GMT, having hit an intraday low at around $1,353 - not far from a low around $1,350 seen last week. Bullion was below a lifetime high around $1,424 struck in early November. 

According to a Reuters market analyst, Wang Tao, spot gold may extend its fall towards $1,329.45 per ounce as a big downward wave "C" is progressing. 

"For today, I would look at support for gold at about $1,350. However, I think if we see a breach of this level, then we could see gold retreating further," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. 

"For the week ahead, I will also expect gold prices to pare some of its gains that was accumulated earlier last week. Currently the gold and the dollar is having a pretty strong
inverse relationship."  

U.S. gold futures hardly moved at $1,362.1 an ounce. 

The euro slipped to its lowest in two months against the dollar as the market looked past a rescue package for Ireland to other euro zone economies and a euro zone crisis resolution
mechanism. 

EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package to help Dublin cover bad bank debts and bridge a huge budget deficit, and approved outlines of a permanent crisis-resolution system which could make private bond holders share the burden of restructuring sovereign debt bought after 2013.  

"The dollar is so strong, but we see buying on the physical side when trading started in Asia. That helps the market a bit. Some Chinese guys may be buying a bit," a dealer in Hong Kong said.  

"I would think $1,350 is a good support for gold, but I don't think we will go down too much even if we break that level." 

Silver also bounced on firmer gold while platinum palladium barely moved. 

The world's largest silver-backed exchange-traded fund, iShares Silver Trust , said its holdings slipped to 10,711.23 tonnes by Nov. 26 from an all-time high of 10,893.68
tonnes by Nov 23.  

In other markets, the Nikkei hit a five-month closing high as the yen softened against the dollar, while oil rose past $84 after the Irish deal.

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