RTRS: Gold inches up, faces resistance as ETF buys stall
Gold nudged up on Thursday, adding to gains from the previous session on concern about the global economy and the financial sector, as well as physical buying in India, the world's largest consumer.
But the market lacked momentum to push toward the key $900 mark, weighed down by stalling investment in the world's largest gold-backed exchange-traded fund.
Gold was trading at $891.50 per ounce at 0230 GMT, up 0.3 percent from the notional close in New York of $889.15. On Wednesday, it rose 0.8 percent.
Gold last closed above $900 on April 2 and fell as low as $864.00 on Friday, its lowest since January 23.
"The market is rising slightly but I don't think it will break above $900, which has become a critical level," said Y.H. Chan, deputy manager at Bank of China in Hong Kong.
"The market is still in a bearish trend," he said, adding that it could test $865 again, at which point physical demand may pick up steam.
Buying from India ahead of the Akshaya Tritya festival on April 27, an auspicious time for gold buying, continues to lend support.
Also, while some risk appetite has returned in recent weeks with stocks recovering from their lows, investor preference for gold as a safe-haven asset remained intact, traders said.
The International Monetary Fund on Wednesday slashed its growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession.
And U.S. banking woes continue, with Morgan Stanley (MS.N) posting a wider-than-expected quarterly loss on Wednesday and slashing its dividend.
One factor weighing on market sentiment was that the holdings of the SPDR Gold Trust have stayed at 1,105.98 tonnes, after investor outflows early this week reached their biggest since early September.
A 44 percent surge in the ETF's holdings since the start of the year had helped underpin gold prices, but the last increase was nearly a month ago.
"The ETF has a strong impact on gold prices. The market is very quiet, as the holdings remain unchanged," Chan said.
