Message: Gold Steadies @ $1050 - earnings eyed.
Gold steadies at $1,050, earnings eyed
Wed Oct 21, 2009 2:28am EDT
By Risa Maeda
TOKYO (Reuters) - Cash gold steadied above $1,050 per ounce on Wednesday after snapping back a day earlier from two days of gains on a recovery in the dollar, with investors looking to corporate earnings for a clue to direction.
Strong earnings from U.S. companies had helped raise investors' risk tolerance, causing a shift in their focus from the safe-haven dollar and U.S. Treasuries to stocks and commodities, including gold.
But on Tuesday U.S. stocks retreated from 12-month highs and the commodity rally hit a bump as a firmer dollar and disappointing U.S. housing and inflation data triggered profit-taking.
"Markets are now paying close attention to U.S. earnings to see beyond the current uncertainty in the economy ... One concern is relatively weak earnings by the financial sector," said Yuki Sonoda, an adviser at Daiichi Commodities Co in Tokyo, adding that Morgan Stanely's earnings due later in the day will be key.
"But the basic line remains the same for gold. That is, gold will keep gaining support from the dollar being on the defensive for the time being," he said.
The precious metal is often seen as a hedge against a weakening dollar. A weaker greenback also makes gold and other commodities cheaper for holders of other currencies.
Spot gold was at $1,055.80 per ounce at 1.40 a.m. EDT, up 0.2 percent from New York's notional close of $1,054.
It hit a record high above $1,070 last week. But physical buying by the jewelry sector has disappeared, weighing on market sentiment.
U.S. gold futures for December delivery were at $1,056.50 per ounce, down 0.2 percent, after rising 50 cents to $1,058.60 on Tuesday.
The dollar steadied on Wednesday after bouncing back from a 14-month low against a basket of currencies a day earlier on comments by policymakers in Europe and Asia on the greenback's decline.
There has been little evidence of buying by long-term investors at current high price levels.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings stood at 1,109.314 tons as of October 20, unchanged since October 7.
"Investment money alone would not make gold's rally sustainable. The other driver, demand from the jewelry sector, fades quickly when the economy deteriorates and is among the slowest to pick up when the economy recovers," Sonoda said.
In other precious metals, platinum and palladium both rose to their highest in more than a year on Tuesday before retreating.
Platinum was at $1,348.50 per ounce after hitting a 13-month high of $1,376 a day earlier and palladium was at $334.50, off a 14-month high of $339.50.
Silver was at $17.44 an ounce, little changed from $17.45 in New York.
© Thomson Reuters 2009 All rights reserved
New Message
Please
login
to post a reply