SINGAPORE - Gold held steady but was off its intraday high on Monday, while palladium rallied to its strongest level in two years as autocatalyst makers in Japan stocked up. Rising palladium prices lifted sister metal platinum to its highest since August 2008. “So far, we are seeing strong demand from palladium from the industrial sector in Japan. There’s also buying in platinum but it’s not that strong,” said a physical dealer in Tokyo. Spot gold was at $1,124.50 an ounce by 0729 GMT, unchanged from New York’s notional close on Friday. It had hit an intraday high of $1,126.70 an ounce on a firmer euro — not far from a two-week high $1,127.75 seen on April 1 — but could face stiff resistance at a 6-½ week high around $1,144 hit in early March. Dealers awaited the release of an ISM survey on the U.S. services sector for March later on Monday, and a policy meeting by the Reserve Bank of Australia on Tuesday, expected to raise rates by 25 basis points to 4.25 percent. “We are likely to see a further strengthening of the dollar ahead,” said Wong Eng Soon, an investment analyst at Phillip Futures in Singapore, referring to recent economic data such as non-farm payrolls that supported the dollar. “All tightening measures, whether they come from Australia or China, have the effect of lower commodity prices. I am looking at the topside resistance at $1,140 and a very firm support at $1,110. Gold has more downside risk.” U.S. gold futures for June delivery were barely moved at $1,125.6 ounce. The New York market reopened on Monday after the Easter holiday. The euro was hardly changed at $1.3475, shedding some early gains, which also kept a lid on bullion prices. A solid rise in private-sector hiring in the United States has led traders to believe the Federal Reserve may raise the discount rate again on Monday when it holds a meeting, providing support to the dollar. But some analysts downplayed the significance of the upcoming Fed board meeting, since it is held every other Monday and is not the closely watched Federal Open Market Committee meeting. Palladium rose as high as $492.50, its strongest since March 2008, and was at $490 by 0729 GMT. “I guess the impact of the Lonmin spillage as well as concerns over a power shortage in South Africa is still limited on platinum. Physical demand is not so strong but at least funds have been buying continuously,” said the Tokyo physical dealer. Lonmin, the world’s third biggest platinum producer, said on March 30 it had shut its No. 1 furnace after another incident at the troublesome smelter, with repairs expected to take over a month. Platinum started to diverge from gold in January after showing a strong correlation with gold prices in the last quarter of 2009. But physical dealers said some auto makers had shifted to using more palladium in diesel and gasoline engines because the price was much cheaper than platinum, while hopes for a further recovery in the global auto sector also boosted demand.

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