News // Metal market
Gold holds near record
07 December 2010 , 08:35Reuters1896
Silver matched a 30-year high hit on Monday in volatile trade. Investors shrugged off news that China, the world's second-largest gold consumer, may raise interest rates this weekend, saying the move had been widely anticipated to cool inflation.
Spot gold fell $2.86 to $1,419.99 an ounce by 0423 GMT after hitting a record around $1,427 on Monday in thin trade.
"There doesn't seem to be any follow through buying, so you can say gold is attracting some year-end profit taking. This is a sign of consolidation," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"There's no change in sentiment...cautiously bullish."
A bullish target at $1,435 an ounce for spot gold is intact as the rise to a record high in the previous session confirmed an extension of the current wave development, according to Reuters technical analyst Wang Tao.
Gold's role as a hedge against inflation got a boost after Federal Reserve Chairman Ben Bernanke said on Sunday the bank could buy more than the $600 billion in U.S. government bonds it has committed to purchase.
"We've seen some retracement but I would still think fundamentals are strong and we've lost confidence in paper money," said a dealer in Hong Kong.
"I think the market will keep this momentum in the next few days and after that we will reach another record high."
Silver slipped below $30 an ounce before rebounding and hitting a high of $30.25, matching a 30-year high hit on Monday on European debt woes.
Dealers in Hong Kong said silver was catching up with gold, while those in Tokyo said the metal was supported by physical buying from the industrial sector.
The world's largest silver-backed exchange-traded fund, iShares Silver Trust, said its holdings rose to 10,816.69 tonnes by Dec. 6 from 10,778.68 on Dec. 2. The holdings jumped to an all-time high of 10,893.68 tonnes on Nov. 23.
The dollar fell to a three-week low against the yen on Tuesday, with gains in the Japanese currency pulling Tokyo stocks lower, while the euro came under renewed pressure as
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