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Friday, February 4, 2011

Egypt Situation In Focus Gold Eases In Asia

Egypt Situation In Focus Gold Eases In Asia : CANBERRA (Dow Jones)--Gold fell a little while trading in a narrow range in Asia Friday, in a regional market thinned by Lunar New Year public holidays in many countries, but holding most of the gains put on overnight after U.S. Federal Reserve Chairman Ben Bernanke effectively underscored a continued easy money policy.

At 0520 GMT, spot gold was bid $1,351.40 a troy ounce, down $4.20 from Thursday's New York close, towards the lower end of the day's trading range thus far of $1,350.30 to $1,355.55. Tocom December gold rose Y51 to Y3,560 a gram.

Technically, gold has bounced off a key target area around $1,320, said Jonathan Barratt, Managing Director of Sydney-based Commodity Broking Services; for the past two days the firm has been urging clients to take long positions.

But other issues are also supporting gold, he said, adding that the crisis in Egypt could be worsening, and is now a flight-to-quality story for gold.

"One of the biggest concerns we have is that it's solved very quickly," because there is greater regional risk if that happens, Barratt said, outlining some contemporary thinking on the issue not too far different from a domino theory.

"If people can see its relatively easy to topple a government then you'll find more of the region being uplifted due to people power trying to dispose of people they don't like" which implies greater instability in the Middle East and North Africa as a whole.

However, if the solution in Egypt takes a long time, say until the next scheduled general election late in 2011, then this is hardly a huge threat, he added.

Earlier Friday, Australian emergency management firm Dynamiq said it held grave concerns for westerners as the security situation in Egypt deteriorates.

Intelligence received by Dynamiq's security personnel in Egypt indicates "terrorist group Hezbollah" has infiltrated the anti-government protests and is working to maximise conflict with government forces, according to a statement issued by the company.

"The situation has clearly worsened in the last 48 hours," Chief Executive Anthony Moorhouse said.

As for the U.S. and its easy money policy, Barratt said the concern is that economic growth is as a direct result of the "stimulus packages that keep on getting poured into the market each month. They are trying to get traction in the real economy via the packages but in doing so are creating markets that are unreal," so people are buying gold.

This theory will be tested with U.S. jobs data scheduled for issue at 1330 GMT, he said. Among other precious metals, spot silver was down 10 cents at $28.85/oz, spot platinum up $4 at $1,841/oz but spot palladium remained unchanged at $818/oz. For the latest updates PRESS CTR + D or visit Stock Market news Today

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