RTRS: Gold slips in year-end trade, but still up on year
Gold softened on Wednesday in thin year-end trade but a stronger euro could offer support for the metal, one of few commodities to end the year firmer after an economic crisis hit demand but gave gold some safe-haven allure.
Looking ahead, geopolitical tensions and worries about a deepening global recession could spur more buying from investors, after a sell-off in equities sent bullion prices plummeting from a record in March to a 13-month low two months ago.
Gold was trading at $867.95 an ounce, down $4.15 an ounce from New York's notional close on Tuesday, having rallied to a 11-week high at $889.55 on Monday after oil jumped more than $2 on concerns Israeli attacks on Hamas could disrupt supplies.
"Buy on the dips if you can and lock in for a run. We've seen obviously in recent days the effects of geopolitical uncertainty again in the Middle East," said Darren Heathcote of Investec Australia in Sydney.
Foreign powers stepped up calls on Israel and Hamas to halt hostilities after four days of Israeli air attacks on the Gaza Strip and rocket salvoes by the Islamist militants deep inside the Jewish state.
Gold struck a record $1,030.80 in March before slipping on a combination of profit taking, oil's fall from its all-time high, a firmer U.S. dollar and recent losses in equities markets that forced investors to cash in to cover losses.
Gold tumbled to its weakest in more than a year around $680 in October but a rebound to $800 the following month triggered technical buying, which also spurred purchases from private investors in Japan and other parts of Asia.
"I think most people should have a chance to go back to $1,000. If we can stabilize around $800, then I think it will go all the way up to test the highs again," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"The market should be a bit bullish in the first quarter of next year. People still don't have faith in other investment tools," said Leung, adding that demand from investors helped offset a lack of buying from jewelers as year-end approached.
Interest in gold-backed exchange-traded funds remains firm. Holdings of the world's largest bullion-backed ETF, New York's SPDR Gold Trust, rose nearly 5 tones to a record 780.23 tones on December 29, the trust said.
Oil slipped to around $39 a barrel on Wednesday, having fallen $1 in the previous session as fear about demand outweighed expectations of further Saudi supply cuts in February and tension in the Middle East due to the Israeli-Hamas conflict.
The euro inched up to $1.4115 in thin trade, with more bleak U.S. economic data on Tuesday adding to expectations of further action from the Federal Reserve.
Prices of single-family homes in October plunged a record 18 percent from a year earlier, while consumer confidence fell to a record low in December.
Platinum was trading at $912.50 an ounce, down $2.00 from New York's notional close.
New York gold futures fell $0.2 an ounce to $869.8 in electronic trade.
