MW: Gold prices fluctuate as physical buyers sidelined
Holdings in the SPDR Gold Trust ETF increase to more than 1,140 metric tons, the highest since June 2008; futures gain more than 2% on the week
By Polya Lesova & Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures seesawed Friday, shying away from multi-month highs as the absence of physical demand made for a choppy trading day.
Gold for June delivery, the most active contract, rose $1.70 to $1,154.50 an ounce on the Comex division of the New York Mercantile Exchange. Earlier it rose as high as $1,159, the highest level for a most-active contract since Jan. 11, according to FactSet, but prices have also dipped into the red as the session progressed.
Gold for April delivery, the thinly traded front-month contract, gained $2.60 to $1,154.80 an ounce.
Earlier, the April contract hit an intraday high of $1,157.90 an ounce, the highest intraday level for that contract since Dec. 14, when it rose to $1,226, according to FactSet data.
For the week, gold was posting an impressive 2.6% gain. Gold for June delivery ended at $1,126.10 an ounce on April 1. Markets were closed April 2 for the Good Friday holiday.
Markets are "very choppy given the recent upward moves for gold," said Andrey Kryuchenkov, an analyst at VTB Capital in London. "To be honest, gold is a little overbought at the moment, and there's not enough physical buying," he added.
Buyers, especially from Asia, had been busy at the beginning of the week but are largely absent Friday, Kryuchenkov said. "It's too expensive for them at the moment. "
But investors may fill the gap left by the physical buyers. A growing number of investors are attracted to gold after the metal broke through its recent trading range, said analysts at Commerzbank AG.
"Continued concerns over Greece's financial situation, coupled with a lack of attractive investment alternatives due to continuously low interest-rate levels both in the U.S. and the euro zone, should keep interest in gold high and should support the gold price," they said in a note.
"Prices received support from robust investment demand reflected by the holdings of SPDR Gold Trust," analysts at ICICI Bank in Mumbai said in a report late Thursday.
Holdings in the SPDR Gold Trust ETF (GLD 113.51, +0.86, +0.76%) , the largest exchange-traded gold fund, rose by 10 tons to 1,140.4 metric tons (1,257.08 short tons) on Thursday, surpassing the previous high of 1,134.03 metric tons (1,250.57 short tons) hit in June 2008, according to fund data.
Oil prices rose above $86 a barrel on Friday, raising gold's appeal as a hedge against inflation. Read more on oil.
Also working to support gold prices was a decline in the value of the U.S. currency. The dollar index (DXY 81.08, -0.45, -0.56%) , which tracks the performance of the greenback against a basket of other major currencies, fell 0.4% to 81.17.
