Gold steadies above $ 1,240 as Asian equities slide
Friday, 24 October 2014 01:06
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Reuters: Gold steadied above $1,240 an ounce on Thursday as Asian stock markets weakened, but caution prevailed as the dollar hovered near one-week highs and outflows from bullion funds continued.
Asian shares sagged after a retreat on Wall Street and falling crude oil prices rekindled investor anxiety over slowing global growth, while a mixed picture on Chinese manufacturing failed to impress markets.
The dollar held near a one-week high against a basket of major currencies, supported by firmer-than-expected US inflation data.
A stronger greenback makes gold more expensive for users of other currencies, dimming the metal’s appeal.
Spot gold was flat at $1,241.83 an ounce by 0349 GMT, after losing 0.7% in the previous session.
Wednesday’s loss took gold away from a six-week high of $1,255.20 hit earlier in the week when fears mounted over an economic slowdown across China, Europe and the United States.
Any slowdown could send investors scuttling to gold, often seen as a safe-haven asset compared with riskier assets such as equities.
But a drop in gold holdings by SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, despite the lingering growth fears has been a concern.
Holdings in the fund, a proxy for market sentiment, fell 0.3% on Wednesday to 749.87 tons, the lowest level since late 2008.
“While bullion prices are likely to remain in choppy trading near-term, a convincing hold and break over the 50-day moving average of $1,247 would theoretically be price-supportive,” said HSBC analyst James Steel.
Meanwhile, gold was seeing some support from physical markets in top consuming region Asia.
In No. 2 bullion consumer India, demand picked up due to the Dhanteras and Diwali festivals this week, which are considered auspicious periods to buy gold.
China, the top consumer, was also seeing good buying interest, with premiums holding near $2 an ounce over the global benchmark.
