Gold flat as Greek deal optimism erases losses
Related Video
A visitor touches a 220 kg (485 lbs.) gold bar, worth around $12.8 million at today's price, on display at the Jinguashi Gold Ecological Park in Xinbei city September 16, 2011.
Credit: Reuters/Pichi Chuang
NEW YORK/LONDON |
NEW YORK/LONDON (Reuters) - Gold ended flat on Thursday, retracing early losses on a dollar drop and optimism that a Greek bailout deal would be agreed next week.
Bullion rose off its session low along with the stronger euro and U.S. equities, as hopes rose that Greece had finally done enough to secure a second bailout package after Athens set out extra budget savings demanded by its international lenders.
Analysts said encouraging U.S. labor, manufacturing and housing data also boosted equity markets and helped lift gold off its lows.
"We are seeing less concern in the Europe and strong U.S. data. Gold will be driven by the dollar and whether Greece will get approved for a bailout package," said Peter Buchanan, senior economist, CIBC World Markets.
Spot gold edged down 25 cents at $1,727.70 an ounce by 3:26 p.m. EST (2026 GMT), sharply off an early session low of $1,705.09 an ounce.
U.S. gold futures for April delivery settled down 30 cents at $1,728.40 an ounce. Trading volume was about 20 percent below its 30-day average, largely in line with its recent pace.
Lingering uncertainty in Europe prompted some gold futures investors to buy and cover short position ahead of a U.S. three-day long weekend, said George Gero, vice president of RBC Capital Markets.
Gold remains up 10 percent in the year to date but is well off its record at $1,920.30 set last year, when bad news from the euro zone tended to have a positive effect on gold, which some saw as a safe haven from economic turmoil.
Analysts said gold prices were underpinned by uncertainty about whether European policymakers have done enough to avoid a chaotic default in Greece or another euro zone country.
"Gold is, so far, finding a fairly solid floor around $1,700.00. There are some big unknowns out there that could throw things out," said Standard Chartered analyst Daniel Smith.
Gold market sentiment improved after data showed the number of Americans filing for new unemployment benefits fell unexpectedly to a near four-year low last week, suggesting the labor market recovery was quickening.
Other encouraging U.S. data showed solid expansion in factory activity in the Mid-Atlantic area this month and builders breaking ground on new residential projects in January.
GOLD DEMAND RISES AGAIN
Gold demand struck 14-year highs in 2011, driven by record investment, buying in China and central bank purchases, which hit their highest in at least 40 years, according to an industry report from the World Gold Council.
Major consumer India's gold imports slumped 44 percent in the last quarter of 2011, however, as record-high local prices depressed buying interest, and shipments are likely to remain at similar levels this year.
China could overtake India this year as the world's top consumer of gold, the report said. "(We are) sticking our neck out a bit and suggesting that 2012 will be the first year that China does exceed India in terms of tonnage demand," WGC managing director for investment, Marcus Grubb, told Reuters.
Silver inched up 0.2 percent to $33.43 an ounce, while spot platinum was down 0.8 percent at $1,619.27 an ounce and spot palladium gained 2 percent at $693.72 an ounce.
(Editing by David Gregorio and Marguerita Choy)
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
What is this madness that afflicts the EU when we know eventually Greece will fail and go bankrupt? In May 2010 Greece was given a €110 billion bailout by the EU. Now it is an additional €130 billion totalling €240 billion that Greece will have received (that’s €240,000 million or around £270 on average for every man, woman and child in the EU, but even more for families in the UK). Money that in all probability we shall never get back, even if the Almighty intervened. It is literally throwing ‘our’ money, the money of the people of the EU and the UK, down the drain. But the most disturbing fact appears to be that the EU is just doing this to keep ‘face’ and no more and is prepared to unleash all this bad debt on the citizens of the European Union, including ourselves. All this seemingly to keep the project going and to keep the gravy train running at full steam for the fortunate few who will fight to the bitter end. The question is though, will they ultimately take the whole of the EU nations to bankruptcy with the domino effect to preserve their fabulous lifestyles? Yes, this is the same EU that has never had its accounts signed off by the auditors. Now that should tell us all something about this madness to nowhere and what is really behind this illogical mentality. For it basically has nothing to do with you and me, but a great deal to do with those who feed from the fabulously wealthy gravy train every day of the year. Considering all therefore, the sooner the EU is shut down the better for all concerned I would say. Indeed it should have been closed down years ago and where this would have saved us all 100s of billions in the process. Yes, 100s of billions of our hard earned tax. China will not invest in it because they know the EU is eventually condemned to failure. But if they did, they would extract a very heavy price from the EU upon default that would cripple the EURO and kill it off. Maybe that is what they are hoping for as their minds in cooperation with Russia are set on creating a new global currency to topple the dollar? Help Greece and its people by all means, but after the inevitable happens. The big question is, why do our politicians always get it so drastically wrong? Can’t blame the banks for this ‘big’ one.
Dr David Hill
Chief Executive
World Innovation Foundation
Follow Reuters