NEW YORK/LONDON (Reuters) - Gold futures eked out a gain on the back of a weaker dollar on Monday, recovering from early investor selling of bullion for cash as they considered what Dubai’s loan payment troubles means for financial markets.
The precious metal was under pressure after falling as much as 5 percent on Friday on news that Dubai planned to delay billions of dollars in debt, reviving fears of another global credit crisis.
Miguel Perez-Santalla, vice president of sales at Heraeus, said that gold fell as investors needed to raise cash to cover losses amid debt woes in Dubai, which is typically a major gold buyer.
Bullion is on track for a 12 percent rise in November alone and the precious metal is only 2 percent below its record high of $1,194.90 an ounce reached on Friday. So far this year it has gained around 33 percent.
Spot gold stood at $1,178.65 an ounce at 3:45 p.m. EST, versus $1,176.70 an ounce late in New York on Friday, when it tumbled to $1,136.80 an ounce, its lowest price since November 20.
COMEX February gold settled up $6.80 at $1,182.30 an ounce on the NYMEX.
The precious metal hit record highs approaching $1,200 per ounce.
“Dubai was a trigger for a correction in gold, but ... it was a correction that might have come anyway given how much gold has risen,” said Jesper Dannesboe, senior commodity strategist at Societe Generale.
“If there’s any uncertainty gold will initially fall, people will close out long positions ... (but) I wouldn’t be surprised if you get strong buying on dips,” he added.
Support was seen coming from physical buying on dips, the prospect of further gold buying by emerging market central banks and bullion’s appeal as a hedge against inflation.
Gold’s losses were also limited by comments from a senior Chinese official who said Dubai’s debt crisis could be China’s opportunity to snap up gold and oil assets.
The dollar fell against the euro and a basket of major currencies .DXY, boosting gold. A weaker dollar makes dollar-priced gold more attractive for non-U.S. investors.
Bullion’s long-term appeal remains undimmed, analysts said, due to increasing appetite from central banks to diversify their reserves and buy more gold, further dollar weakness and the metal’s allure as a hedge against inflation.
Last week, the International Monetary Fund said it had sold 10 tonnes of gold to the Central Bank of Sri Lanka, adding the sale was part of the 403.3 tonnes approved by its executive board in September.
The IMF has already sold 202 tonnes to the Reserve Bank of India and the Bank of Mauritius.
Silver was at $18.37 an ounce versus $18.25 an ounce on Friday, when it hit a near two-week low of $17.66.
Platinum was at $1,451 an ounce, up from a close of $1,436.50 an ounce on Friday, when it touched a one week low of
Palladium was at $362.50 versus $362 an ounce on Friday, when it touched a one-week low of $351.
Close Change Pct 2008 YTD
Chg Close % Chg US gold 1182.30 6.8 0.6 884.3 33.7 US silver 18.525 0.190 1.0 11.295 64.0 US platinum 1460.20 13.10 0.9 941.50 55.1 US palladium 366.20 -2.35 -0.6 188.70 94.1
Prices at 2:39 p.m. EST Gold 1176.15 -0.55 0.0 878.20 33.9 Silver 18.37 0.12 0.7 11.30 62.6 Platinum 1454.50 18.00 1.3 924.50 57.3 Palladium 362.00 0.000 0.0 184.50 96.2
Gold Fix 1175.75 3.75 0.3 836.50 40.6 Silver Fix 18.14 16.00 0.9 14.76 22.9 Platinum Fix 1442.00 2.00 0.1 1529 -5.7 Palladium Fix 360.50 1.50 0.4 365.0 -1.2
Additional reporting by Maytaal Angel in London