AP: Gold near 3-week high on commodities boost, dollar
Gold prices rose to near three-week highs in Europe on Wednesday as fresh new year investment flows boosted commodities, and as the dollar trimmed its gains after US jobs data.
Spot gold was bid at $1 128.00 (R8 280) an ounce at 16:52 SA time, against $1 118.10 late in New York on Tuesday.
US gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose $9.40 to $1 128.10 an ounce.
The yellow metal is being caught up in positive sentiment towards commodities, analysts said.
"(This is) a commodity story really, and gold is benefiting from that," said Simon Weeks, head of precious metals at the Bank of Nova Scotia. "Currencies are not in favour generally."
The metal has extended gains since the release on Wednesday of ADP employment figures for December, which showed private employers shed the fewest jobs since March 2008, but still disappointed some expectations.
The news pressured the dollar from highs against the euro, lifting gold. Weakness in the US unit boosts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Trading was cautious ahead of key US non-farm payrolls data for December on Friday, as investors await evidence of how the economy is faring.
The payrolls data is expected to shape expectations for when the Federal Reserve will start tightening its ultra-loose monetary policy and determine the direction of the dollar.
"We have an attractive interest rate environment for gold, and investment inflows into commodities are supporting gold prices," said Commerzbank analyst Eugen Weinberg.
"The performance of gold will also be dependent on what's going on in the dollar," he added.
TECHNICAL INDICATORS
From a technical perspective, gold is poised for further gains, said analysts who study past price movements for clues as to future trading patterns.
"With net speculative length having unwound from recent extremes, the near-term prospects for gold have improved," said technical analysts at Barclays Capital.
"Furthermore, with daily momentum rolling higher from oversold conditions and price action having repeatedly held trendline support, odds favour continued gains."
If near-term resistance is confirmed, gold could push back towards the top end of its current range at $1 200 an ounce, they said, close to the record high of $1 226.10 an ounce it reached in December.
Among other precious metals, silver was bid at $17.95 an ounce against $17.76, while palladium was at $422 an ounce against $418. Platinum hit a new 16-month high at $1 557.50 and was later at $1 551.50 an ounce against $1 528.50.
Platinum group metals traders welcomed news that US auto sales hit 11.25 million in December, the fourth month of consecutive improvement after a weak year. Carmakers account for more than half of platinum consumption.
The world's biggest automaker, Toyota, said it sold 21 percent more cars in China in 2009 than a year earlier, while GM's China sales rose 67 percent.
The two platinum group metals had already risen sharply on news that exchange-traded funds backed by the metals will be launched in the United States.
"Signs of recovery in the US auto market and expectations US ETFs could soon begin trading continue to underpin PGM price," said James Moore, an analyst at TheBullionDesk.com. - Reuters
