BLBG: Gold, Little Changed, May Gain for First Day in Three on Dollar
By Glenys Sim
March 10 (Bloomberg) -- Gold, trading little changed in Asia, may gain for the first time in three days as a resumption in the dollar’s weakness boosts investor demand for the precious metal as an alternative asset.
Gold for immediate delivery rose as much as 0.2 percent to $1,123.54 an ounce, before trading at $1,122.10 at 10:10 a.m. in Singapore. Bullion, which tends to move inversely to the dollar, has gained 0.4 percent this month as the dollar lost 0.3 percent against a basket of six currencies including the euro and yen.
The metal is “hovering in the $1,100 to $1,200 range as investors vacillate between liking and avoiding risk,” said Jia Wei, analyst at Jiangsu Suwu Futures Brokerage Co. “The market will continue to loosely track the performance of the dollar and euro, both influenced by debt concerns in the euro region.”
Investor concern that Greece will struggle to curb the region’s largest government deficit has hurt the euro over the past month. Greek Prime Minister George Papandreou said yesterday that President Barack Obama expressed support for measures being taken to deal with the crisis.
Gold fell as much as 1.3 percent to a one-week low yesterday after China said that bullion will probably not be the country’s main investment to diversify its reserve holdings. While the price had “handsome gains” in recent years, there were “big ups and downs” over the past 30, Yi Gang, head of the State Administration of Foreign Exchange, said yesterday.
“We believe that China does not want to politicize its purchases of U.S. Treasuries and that it will continue regular purchases,” HSBC Securities analyst James Steel wrote in a note. If China’s buying of U.S. government debt helps “keep interest rates low, then gold is more likely to benefit from continued loose U.S. monetary policy,” Steel wrote.
The Dollar Index was barely changed today after Federal Reserve Bank of Chicago President Charles Evans said that low interest rates are likely to be needed “for some time.”
Among other precious metals for immediate delivery, silver was up 0.1 percent at $17.27 an ounce, while platinum and palladium were little changed at $1,592.10 an ounce and $466.75 an ounce respectively.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
