Arab Today, arab today gold holds firm on ecb rate cues
Last Updated : GMT 10:54:59
Arab Today, arab today
Arab Today, arab today

Gold holds firm on ECB rate cues

Arab Today, arab today

Arab Today, arab today Gold holds firm on ECB rate cues

London - Arabstoday

Gold prices held just below $1,530 (Dh5,619) an ounce yesterday as the European Central Bank raised its benchmark rates, having earlier hit fresh two-week highs as worries over the Eurozone debt crisis prompted buying. ECB chief Jean-Claude Trichet was due to speak at a news conference late Thursday, after the bank raised interest rates by 25 basis points as expected. Trichet\'s comments will be closely watched for any indications on the bank\'s policy intentions for the remainder of this year. Spot gold was bid at $1,526.79 an ounce at 1218 GMT against $1,527.50 late in New York on Wednesday. US gold futures for August delivery fell $2.40 at $1,526.80. Prices earlier climbed as high as $1,534.20 an ounce, their highest since June 23, recovering from two consecutive weeks of losses, before retreating in line with the euro. They have since steadied. \"The buying is currently always bigger than the selling, and therefore the moves are always more exaggerated to the upside. The market is seeking out bullish news,\" said ANZ Bank analyst Peter Hillyard. \"Situations like Portugal, what is continuing to happen in Greece... will be the bullish triggers that will take [prices] up.\" The euro remained lower on the day after the ECB rate hike, extending losses for a third day on expectations that worries about Europe\'s sovereign debt will take centre stage again. The single currency was under pressure earlier in the day after Moody\'s ratings agency downgraded Portuguese banks\' government-guaranteed debt after it cut the country\'s credit rating to junk the previous day. Concerns over debt levels in some smaller Eurozone economies, including Greece, Portugal and Ireland, were a key factor pushing gold prices to record highs above $1,575 an ounce in May. hile rising interest rates typically weigh on gold, expectations that the ECB will lift rates more quickly than the US Federal Reserve are supportive of the precious metal, which tends to benefit from a weaker dollar. \"We continue to consider the gold market to be \"under-bought\" relative to the level of US real interest rates, and expect current low real rates to motivate a rise in net speculative positions, providing support for a further rally in gold prices,\" Goldman Sachs said in a note yesterday. It added, however: \"We continue to expect gold prices to peak in 2012 as US real interest rates rise with the ongoing economic recovery, and the potential for US real interest rates to rise more quickly than we anticipate presents a downside risk to gold prices.\" On the supply side of the market, talks between striking Indonesian workers at the world\'s biggest gold mine and Freeport McMoRan Copper and Gold\'s management have broken down, leaving mining still halted, a government official said yesterday. Among other precious metals, silver was bid at $36.01 an ounce against $35.85. The gold:silver ratio — the number of ounces of silver needed to buy and ounce of gold stood at around 42.5 Thursday, well above April\'s 28-year low of 31.7, meaning silver has become less expensive compared to gold as prices of both have retreated. \"While we believe silver could continue to outperform other precious metals, we are concerned about persistent levels of volatility and damage to technical indicators and sentiment. Consequently, we maintain our preference for gold in the short term,\" said Morgan Stanley in a note. Spot platinum was bid at $1,719.49 an ounce versus $1,721.60, while spot palladium was at $767.72 an ounce against $762.48. Copper rose in New York on concern about supply stoked by adverse weather in Chile, the world\'s biggest producer of the metal, and a strike at the Grasberg mine in Indonesia. Chile predicted more bad weather for the Atacama Desert, where Codelco and BHP Billiton dig for copper. The Collahuasi mine was affected by snowfall along with Teck Resources\' Quebrada Blanca. That helped copper to rebound after slipping Thursday as China increased interest rates. \"The market is worried about supply, for the moment shrugging aside the increase in rates out of China [Thursday],\" said Robin Bhar, an analyst at Credit Agricole in London. \"That\'s really what\'s keeping the price elevated.\" Copper for September delivery advanced 3.1 cents, or 0.7 per cent, to $4.366 a pound by 8:33am on the Comex in New York. Prices reached $4.372, the highest level since April 25, and climbed for a sixth day. Copper for three-month delivery gained 0.7 per cent to $9,583 a tonne on the London Metal Exchange. Rain is also expected to affect Chile\'s Antofagasta region, where BHP operates Escondida, the world\'s largest copper mine. Output disruptions may worsen a projected shortage this year, estimated by the International Copper Study Group to be about 377,000 tonnes. From / Gulf News

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Arab Today, arab today gold holds firm on ecb rate cues Arab Today, arab today gold holds firm on ecb rate cues

 



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