SPDR gold ETF holds at record levels; iShares silver sees outflows
Gold (GOLDC-I) sharply pared gains in Europe on Wednesday as the U.S. dollar recovered lost ground versus the euro, after sources said a U.S. sovereign credit rating downgrade would not stop Asian central banks buying Treasuries.
Bullion, often bought as a hedge against weakness in the U.S. currency, rose in earlier trade as the dollar fell to five-month lows versus the euro on sharper risk appetite.
Spot gold was bid at $980.65 (U.S.) an ounce at 0903 GMT, against $980.85 an ounce late in New York on Tuesday.
Commerzbank trader Rory McVeigh said while dollar weakness helped support gold, the metal was likely to encounter heavy resistance on its way up to the key $1,000 mark.
“The problem is that these are speculative longs, and as we get towards $1,000 an ounce, you will get waves of selling as people take money off the table,” he said.
The dollar rose to session highs against the euro after sources told Reuters that a downgrade in U.S. sovereign credit ratings would not discourage Asian central banks from buying U.S. Treasuries.
Earlier the U.S. currency hit a five-month trough against the euro as traders sold the unit in favour of higher-yielding currencies on growing hopes the economy may be recovering from its lows.
Traders eyed a welter of data due out in the United States later in the session – including ADP and Challenger jobs data, the ISM May non-manufacturing index and the April factory orders report – for their impact on the currency markets.
Investor interest in the metal remained relatively firm. Holdings of the SPDR Gold Trust exchange-traded fund were at record levels on Tuesday, while ETF Securities said holdings of its GBS ETF rose more than 7,000 ounces that day.
Gold demand in India, the world's biggest bullion consumer, stayed weak on Wednesday as high prices dampened buying interest.
Among other precious metals, silver was at $15.93 an ounce against $15.94. The world's largest silver exchange-traded fund, the iShares Silver Trust, said its holdings dipped by 3.11 tonnes on Tuesday, but remain near record levels.
Spot platinum was quoted at $1,240.50 an ounce against $1,238.50 late in New York on day, while spot palladium was at $249 against $246.50.
Both remain depressed by the lacklustre outlook for the car industry, consumer of around half gobal supply of the metals.
Data released on Tuesday showed U.S. auto sales fell nearly 34 per cent in May from a year earlier, but aggressive discounting helped steady results.
“Although U.S. auto sales remain weak, data for May showed some improvement from April, which we believe helped support platinum group metals prices,” said HSBC in a note.
“Even a mild upturn in auto demand may spur the PGMs to rally further, as production cutbacks have reduced supply.”
