GOLD retreated from highs hit earlier in the session yesterday as equity markets rallied and the dollar edged off lows against the euro. Other precious metals remained strong, with platinum climbing more than 6% and silver 4% to session highs, supported by a broad-based commodities rally.
Spot gold was quoted at $835,10-$838,10 by midafternoon from $830,80. Earlier it jumped 2% to a session high of $853,50/oz. Financial markets surged after news that the US could pump $250bn into US banks.
Mark O’Byrne of Gold & Silver Investments said uncertainty in equities made gold’s near-term direction hard to call, but “traditionally, when you see the Dow Jones and the FTSE do well, people sell gold”.
The dollar added to pressure on bullion as it recovered from earlier lows against the euro. “We still believe that the main driver of gold is going to be the US dollar,” said Walter de Wet of Standard Bank said. “If sentiment improves and the US dollar appreciates, gold should move lower.”
Firmer crude prices were underpinning gold, however. Oil surged more than $2 a barrel as government moves to rescue banks fuelled hopes a global recession may be averted.
Rising crude prices boost interest in gold as a hedge against oil-led inflation, and enhance the appeal of commodities as an asset class. Reuters
