Gold prices rose to their highest in more than a month on Thursday after
European leaders agreed on a plan to contain the region's debt crisis,
lifting sentiment in the financial markets.
Eurozone leaders reached agreement on a comprehensive package of
measures to tackle the bloc's debt crisis after an EU summit that ran
into the early hours of Thursday, spurring the euro to a seven-week high
against the dollar.
Gold rose in tandem with other commodities and equities, with cash
prices up half a per cent to a one-month high of $1,728.11 an ounce,
before easing to $1,722.69 by 0623 GMT (1153 IST), on course for its
fifth straight session of gains.
US gold futures, which also hit a one-month high of $1,729.8, traded nearly flat at $1,724.20.
"The market is back to normal," said Dick Poon, manager of precious metals at Heraeus in Hong Kong, "The equity market has stabilised on hopes in Europe, and money is flowing back to precious metals."
Technical analysis suggested spot gold could face a strong resistance at $1,725 and may retrace to $1,701 during the day, said Reuters market analyst Wang Tao.
US gold futures, which also hit a one-month high of $1,729.8, traded nearly flat at $1,724.20.
"The market is back to normal," said Dick Poon, manager of precious metals at Heraeus in Hong Kong, "The equity market has stabilised on hopes in Europe, and money is flowing back to precious metals."
Technical analysis suggested spot gold could face a strong resistance at $1,725 and may retrace to $1,701 during the day, said Reuters market analyst Wang Tao.
GOLD INTEREST SEEN SUPPORTED
Market participants cautioned that Europe's problems might take a long time to be solved even after the summit pact, which would help support safe haven interest in gold in the medium to long term.
"Yes we've seen an agreement, but there will be a time lag between now and execution of the plan," said a Shanghai-based trader, adding that the lingering uncertainty over global growth will continue to support gold.
Investment interest has returned to the gold market in the past few days, as fears over the euro zone debt crisis eased with progress in the political wrangling among European leaders.
The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, recorded an inflow of 16.645 tonnes over the past three sessions, according to the fund's website. (www.exchangetradedgold.com)
Physical demand for gold as well as silver remained robust in Asia, thanks to strong investment demand as well as seasonal buying during the ongoing festival and wedding season in India, the world's largest gold consumer.
Spot platinum rose to a one-month high of $1,601.25 before easing to $1,593.49. Spot palladium rose as much as 1.5% to $651.5, and pared some gains to $644.72.
Market participants cautioned that Europe's problems might take a long time to be solved even after the summit pact, which would help support safe haven interest in gold in the medium to long term.
"Yes we've seen an agreement, but there will be a time lag between now and execution of the plan," said a Shanghai-based trader, adding that the lingering uncertainty over global growth will continue to support gold.
Investment interest has returned to the gold market in the past few days, as fears over the euro zone debt crisis eased with progress in the political wrangling among European leaders.
The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, recorded an inflow of 16.645 tonnes over the past three sessions, according to the fund's website. (www.exchangetradedgold.com)
Physical demand for gold as well as silver remained robust in Asia, thanks to strong investment demand as well as seasonal buying during the ongoing festival and wedding season in India, the world's largest gold consumer.
Spot platinum rose to a one-month high of $1,601.25 before easing to $1,593.49. Spot palladium rose as much as 1.5% to $651.5, and pared some gains to $644.72.
Reuters / Singapore Oct 27, 2011, 13:39
