Gold down, but stocks turmoil keeps it close to 9-week highs | Reuters - Firstpost
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Gold down, but stocks turmoil keeps it close to 9-week highs | Reuters

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LONDON Gold retreated on Monday as the dollar rose versus the euro, but was still around a nine-week high as pressure on stock markets continued to support investors' flight to safety.

Asian shares sank to their lowest in more than four years on Monday after the People's Bank of China guided the yuan's midpoint rate sharply stronger.

European and U.S. shares were steadier, weighing on bullion prices, usually seen as a safer bet by investors.

Spot gold was down 0.6 percent at $1,097.55 an ounce by 1533 GMT, while U.S. gold futures were unchanged at $1,097.40.

"There is a bit of short rally now, it seems that gold has encountered resistance at the 100-day moving average, which comes in at $1,109," Mitsubishi Corp strategist Jonathan Butler said.

"We see things being tough in the first half and that's related to a probable increase in rates again towards June, the dollar could have a little more strength from here, especially if Europe or Japan extend quantitative easing."

Gold climbed to its highest since early November on Friday, adding more than 4 percent to its value this year, on concerns over the Chinese economy and tumbling stock markets.

Perceived missteps by China's authorities in controlling their share market and currency have led to concerns Beijing might lose its grip on economic policy.

China will face great difficulty in achieving economic growth above 6.5 percent over the 2016-2020 period on slowing global demand and rising labour costs, the China Securities Journal quoted a top state adviser as saying.

China is the world's biggest consumer of gold at around 1,000 tonnes a year.

Gold slid 10 percent last year on fears higher U.S. rates would lower demand for the non-interest-paying asset, while boosting the dollar. A stronger greenback makes dollar-denominated gold costlier for holders of other currencies.

"An accelerated pace of tightening is going to be bearish for the gold market," Societe Generale analyst Robin Bhar said.

Investment appetite for bullion showed signs of picking up last week. Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 4.2 tonnes on Thursday, data from the fund showed.

Bullion is often seen as an alternative investment during times of financial uncertainty, although safe-haven rallies tend to be short-lived.

Palladium fell to its lowest since August 2010 at $477.75 an ounce, while platinum 3.2 percent to $843.95 an ounce. Silver rose 0.3 percent at $13.98 an ounce.

(Additional reporting by Naveen Thukral in SINGAPORE; Editing by William Hardy and David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Jan 12, 2016 00:15 IST

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