LONDON — Gold was steady in Europe on Wednesday as traders awaited direction from this week's G20 summit in London, with the firmer dollar versus the euro curbing interest in the precious metal.
Bullion ended the first quarter of the year up 4 per cent, boosted by fears measures to stimulate the global economy would lead to a rise in inflation.
Spot gold was little changed at $919.30/921.40 (U.S.) an ounce at 1007 GMT from $917.15 late in New York on Tuesday. Trading is expected to be muted ahead of Thursday's meeting of G20 leaders.
“The market is looking for guidance, and if (the G20) can't provide that, risk aversion will obviously continue and that will have an impact on gold on the upside,” said Saxo Bank senior manager Ole Hansen.
World leaders are gathering in London to tackle the global economic crisis, amid fresh signs of weakness in major economies including Japan, where business confidence fell to record lows.
Traders are also awaiting an interest rate decision from the European Central Bank on Thursday and Friday's U.S. non-farm payrolls data for direction.
Meanwhile a rise in the dollar, typically a key driver for gold, is curbing buying interest in the metal.
The currency was supported as uncertainty over the outlook for U.S. carmakers and falling share prices prompted investors to seek perceived safer assets.
Traders said gold's failure to build on the gains it posted last quarter on fears over the inflation outlook and strong inflows into exchange-traded funds such as New York's SPDR Gold Trust is also weighing on prices.
“The market is disappointed that gold has not been able to hold upside gains,” said Deutsche Bank trader Michael Blumenroth.
The European Central Bank said it completed the sale of 35.5 tonnes of gold on Tuesday. However, the news had little impact on price.
The other precious metals were little changed. Spot platinum was at $1,123/1,131 an ounce from $1,123.50, while spot palladium was at $215/218 an ounce, against $213.50.
The metals suffered from falling demand from carmakers as the economic downturn gathered pace, the major buyers of the metals which are used in the manufacture of autocatalysts.
But platinum, which fell as much as 68 per cent towards the end of last year from its record high of $2,290 an ounce reached in March, recovered in the first quarter, posting gains of nearly 21 per cent, according to Reuters data.
Precious metals group Heraeus said in a monthly note that platinum had benefited from speculators' and investors' hopes of a turnaround in the global economic situation.
“Buyers were relying on the surprisingly good figures from the U.S. economy – home sales and durable goods – as well as the U.S. government's plan to buy up “toxic assets” worth $1 trillion from the banks,” it said.
Platinum specialist Johnson Matthey said its final-quarter sales were down year-on-year because of the weak automotive market and lower metal prices, in line with its expectations.
Spot silver was steady at $12.93/13.00 an ounce against $12.93 late in New York on Tuesday, awaiting direction from gold. Silver prices rose 14 per cent in the first quarter.
