Gold futures ease from one-week high, falls on easing eurozone fears

Singapore: Gold prices eased on Friday as fears about the health of the global economy abated after successful debt sales by Spain and Italy encouraged investors to put their money in riskier assets.

Bullion was still headed for a second straight week of gains on safe-haven buying as markets fretted about the eurozone debt crisis and tensions between Iran and the West.

Strong demand from India, the world’s top gold consumer, also supported the sentiment. India gold futures are likely to ease from their highest level in a week, following overseas markets and a rising rupee back home, analysts said.

The most-active gold for February delivery on the Multi Commodity Exchange (MCX) last ended almost flat at 27,665 rupees per 10 grams, after hitting a high of 27,816 rupees, a level last seen on 6 January. Comex gold for February delivery was down 0.56 percent at $1,638.5 an ounce.

The rupee, which rose on Friday, plays an important role in determining the landed cost of the yellow and red metal, which is quoted in dollars.

Analysts said gold was likely to retain its allure as the relief over the eurozone debt crisis after the successful sales of Spanish and Italian debt on Thursday might be temporary.

“The recent headlines from the eurozone and the United States have not offered signs of essential change on the fundamentals of those economies,” said Hou Xinqiang, an analyst at Jinrui Futures.

“Before we see any substantial change, gold prices are likely rangebound with $1,660 being the key resistance.”

After a spate of upbeat data in recent weeks, latest US data showed that retail sales rose at the weakest pace in seven months in December and jobless benefits moved higher last week, suggesting the economic recovery is shaky despite a recent pick-up in growth.

US gold fell half a percent to $1,639.10.

Technical analysis suggested that spot gold could fall towards $1,600 an ounce during the day, said Reuters market analyst Wang Tao.

Sentiment in gold was also dampened after a sell-off in oil in the previous session on news that a proposed European Union embargo on Iranian crude imports would be phased in over six months.

“The decreased geopolitical risk in the Middle East helped knock down oil and is depressing gold prices,” said a Singapore-based trader, but added that active buying from India is likely to support gold prices in the coming week.

The Indian rupee hit a one-month high in the previous session, boosting the purchasing power of the world’s largest gold consumer, just as its wedding season re-starts this weekend.

Other precious metals also came under pressure after sharp gains earlier in the week. Spot silver dropped 1.6 percent to $29.78 after four sessions of continuous climb, and was on course for a weekly rise of more than 3 percent.

Spot platinum fell 1.3 percent to $1,471.99, headed for a 5.1 percent gain from a week earlier on supply concerns sparked by power shortage in South Africa, the world’s top producer of the metal.

Reuters