By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — Gold and silver futures held broadly steady Wednesday as traders remained on the sidelines following massive swings for both metals in recent days.
Gold for December delivery GC1Z +0.36% edged up $3.90, or 0.2%, to $1,656.40 an ounce and the December silver contract SI1Z -0.23% rose 26 cents, or 0.8%, to $31.80 an ounce.
The relatively subdued moves followed big losses for both gold and silver last week, including the gold contract’s worst day in five years on Friday, as traders sold precious metals to raise cash. The losses were followed by a rebound Tuesday amid hopes for progress over the European sovereign debt crisis.
Shamin Mansoor, an analyst at Daniel Stewart, said that despite the sharp drop for gold in the last week, redemptions from gold exchange-traded funds have been light. On top of that, lower prices also appear to be bringing back emerging-market buyers, Mansoor said, in a note to clients.
Commerzbank analysts agreed that the price fall is driving increased buying of physical gold.
“In India especially, where the festival season is about to begin, demand is reported to be high and some local traders are already speaking of supply bottlenecks,” Eugen Weinberg, Commerzbank’s head of commodity research, said in a note.
Commerzbank also highlighted that European central banks could soon join their emerging-market counterparts as net buyers of gold.
In the second fiscal year of the current Central Bank Gold Agreement, which ended Monday, European central banks sold just 1.1 tons of gold. The annual figure has now fallen sharply for four straight years.
“The price of gold should be well supported on this front in the medium to long term,” Commerzbank said.
