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Gold inches up as dollar retreats against euro Sun Oct 25, 2009 11:07pm EDT Email | Print | Share | Reprints | Single Page [-] Text [+] More News PRECIOUS-Gold inches up as dollar retreats against euro 10:56pm EDT PRECIOUS-Gold eases as firmer dollar eyed 8:17pm EDT Market News Earnings, data to determine rally's fate Sterling extends losses, dollar makes modest gains Oil falls for third day on recovery concerns | Video More Business & Investing News... By Chikako Mogi TOKYO (Reuters) - Gold inched up toward $1,060 on Monday as the dollar fell to a 14-month low against the euro, but weak physical demand capped the upside for bullion. After hitting record highs above $1,070 per ounce on October 14, gold prices have traded in a narrow range, centering around $1,060, with support near $1,040. Gold has gained on the dollar's decline because a weaker dollar boosts investor interest in gold as a hedge and makes bullion cheaper for non-dollar holders, but buying momentum has lost some of its steam given weak jewelry demand and high prices spurring scrap sales. "Gold remains in an uptrend as long as the dollar is in a downtrend, but with physical demand weak, bullion lacks incentives to test new highs," said Koichiro Kamei, managing director at financial research firm Market Strategy Institute. |
October 25, 2009 |
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TOKYO (Reuters) - Gold inched up toward $1,060 on Monday as the dollar fell to a 14-month low against the euro, but weak physical demand capped the upside for bullion.
After hitting record highs above $1,070 per ounce on October 14, gold prices have traded in a narrow range, centering around $1,060, with support near $1,040.
Gold has gained on the dollar's decline because a weaker dollar boosts investor interest in gold as a hedge and makes bullion cheaper for non-dollar holders, but buying momentum has lost some of its steam given weak jewelry demand and high prices spurring scrap sales.
"Gold remains in an uptrend as long as the dollar is in a downtrend, but with physical demand weak, bullion lacks incentives to test new highs," said Koichiro Kamei, managing director at financial research firm Market Strategy Institute.
"The market is moving in tandem with the euro/dollar moves."
Expectations for U.S. interest rates to stay low well into next year will likely push the euro higher, with some forecasting the single currency to reach $1.52 in the coming three months.
As of 0225 GMT, spot gold inched up 0.3 percent to $1,056.65 an ounce from New York's notional close of $1,053.95.
U.S. gold futures for December delivery erased earlier losses to hold steady at $1,057.2 an ounce, compared with $1,056.40 on the COMEX division of the New York Mercantile Exchange.
The euro may hit $1.52 and even higher in the coming three months and euro zone officials may not express serious concerns, as the single currency is not extremely strong on the basis of a trade-weighted average, said Masafumi Yamamoto, chief foreign exchange strategist for Japan at Barclays Capital.
""A turnaround for the dollar is unlikely to happen until we can envisage U.S. interest rates rising, making it easier for the euro to test its upside," he said.
The euro rose to a 14-month high of $1.5064 on Monday.
Gold eased on Friday as the dollar rose against the euro and sterling on a strong U.S. housing report and bleak UK economic data.
Kamei expected support to remain firm at $1,020-$1,030 per ounce and prices to stay near the upper end of the recent $1,040-$1,070 range until hedge funds start reporting their results next month, which may weigh on gold as they take profits before their book closing.
Speculative positions in U.S. gold futures eased from peaks but stayed at high levels, indicating that new money continued to enter even when others took profits, he said.
Noncommercial net long U.S. gold futures positions fell 1.5 percent to 250,107 lots in the week to October 20 from a record 253,955 lots the week before, the weekly Commitments of Traders report published by the Commodity Futures Trading Commission showed.
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