Greek political leaders have agreed on all points of a bailout package except one -- pension cuts -- and officials said discussions with international lenders would continue so a deal could be concluded before a meeting of euro zone finance
ministers on Thursday.
Bailing out Greece will boost the euro against the dollar for a while, making dollar-denominated assets such as gold cheaper and more attractive, traders said. This would help gold maintain its appeal even if the Greek deal diminishes its safe
haven status.
"Greece seems to be closer to a concrete deal, which weighs on the dollar and helps gold," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.
Spot gold edged up 0.1 percent to $1,735.69 an ounce by 0803 GMT, recovering from an intra-day low of $1,725.49. U.S. gold inched up 0.4 percent to $1,738.60.
Gold was also boosted by a stronger-than-expected inflation reading out of China, which investors said may mean the central bank will hold off on aggressive monetary easing for now. But many economists expect inflation to ease February onwards, leaving China's policy of targeted monetary and fiscal easing intact.
Gold is seen as a good hedge against inflation, and is regarded as a good investment when accommodative monetary policies raise the outlook for price increases.
Technical analysis suggested that spot could fall to $1,698 an ounce during the day, said Reuters market analyst Wang Tao.
Though Greece is widely expected to reach a deal with its international lenders on the bailout deal, its troubles are likely to go on, supporting safe-haven interest in gold in the longer term, analysts and traders say.
Later in the day investors will focus on what the European Central Bank is willing to do to help Greece when it holds its monthly policy meeting, with interest rates expected to stay on hold ahead of a major funding operation later this month.
"Gold is likely to remain in a sideways mode for a while between $1,700 and $1,800, unless we see any big surprise that could indicate a clear direction," said Hou Xinqiang, an analyst at Jinrui Futures in the southern city of Shenzhen.
The gold-silver ratio dipped to around 51, its lowest level in more than three months.
Spot silver edged down 0.2 percent to $33.90. Asia's physical gold market remained subdued, as market participants await a clear direction out of the Greek debt saga.
"We don't see much scrap and buying has cooled after prices rebounded, as everyone is in wait-and-see mode," said Leung of Lee Cheong.
MCX gold prices feb 9 2012
Gold futures prices today rose Rs 131 to Rs 28,632 per 10 grams, as speculators enlarged their positions on the back of pick-up in demand for the ongoing marriage season amid a firming global trend.
At the Multi Commodity Exchange, gold for delivery in June moved up by Rs 131 or 0.46 per cent to Rs 28,632 per 10 grams with a business turnover of 81 lots. In a similar fashion, April contract traded higher by Rs 115 or 0.41 per cent to Rs 28,291 per 10 grams in 3,815 lots.
Market analysts said increased buying by speculators following pick-up in demand due to ongoing marriage season amid a firming global trend mainly led to a rise in gold prices at the futures trade. Meanwhile, the yellow metal rose 0.2 per cent to $1,736.78 an ounce in Singapore. For the latest updates on the stock market, visit Stock Market Today
gold futures price feb 9 2012, spot gold price feb 9 2012, gold price february 9 2012, For the latest updates PRESS CTR + D or visit Stock Market news Today
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