LONDON—Spot gold gained in Europe, moving in tandem with assets such as base metals and equities, with underlying support provided by seasonally strong physical demand from Asia, according to market players.
Monday morning, spot gold was at $1,648.60 a troy ounce, up from $1,642.50 late Friday in New York. The rest of the precious metal complex was steady or modestly higher. Silver was at $31.395 per ounce, compared with $31.45. Spot platinum was at $1,517.90 per ounce, compared with $1,513.50, while spot palladium rose to $619.75 per ounce from $615.50.
"The precious metals have...seen a positive start this morning as a result of the weaker dollar and return of risk appetite," said James Moore of FastMarkets.com.
Risk-related assets gained Monday on confidence that, despite a lack of detail about the weekend's meeting of European Union officials, progress has been made on resolving the region's debt crisis. A further summit is scheduled for Wednesday.
In China, the preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to 51.1 in October from a final reading of 49.9 in September.
An important layer of gold support is coming from seasonally strong physical demand from Asia, said Suki Cooper of Barclays Capital.
While investment interest in the metal has stabilized, "physical demand continues to emerge, albeit at softer levels," said Ms. Cooper. "This remains key before investment demand returns to the driver's seat," she added.
The bank retained its positive view on gold, forecasting an average fourth -quarter price of $1,875 per ounce and an annual 2012 price of $2,000, although Ms. Cooper said that investors' hesitance to take on risk, and the need for liquidity, will likely set the tone of trading in the near term.
Citigroup, meanwhile, raised its gold and silver forecasts for 2012 and 2013 Monday, citing expectations of increased resilience in both metals amid a "high probability" that the macroeconomic and financial factors that have propelled prices over the past three years will continue for the next 12 to 18 months.
The bank upgraded its 2012 gold forecast to $1,950 per ounce from $1,650 per ounce and its 2013 outlook to $1,745 from $1,500. For silver, Citigroup expects a 2012 price of $32.90 per ounce, compared with its earlier forecast of $26. It forecast a 2013 price of $27 per ounce, up from $22.40.
Write to Francesca Freeman at francesca.freeman@dowjones.com
