London 16/06/2011 - Gold traded lower in Thursday morning business in Europe, pressured by a surging dollar as macroeconomic concerns continued to linger, although its role as a safe-haven helped to curtail losses.
Spot gold remained hemmed within a broad $1,510-$1,530 per ounce range and was last at $1,525/1,525.80, down $5.22- it edged to its highest level this week at $1,534.75 on Wednesday before retreating.
On the charts, resistance is pegged at $1,530, $1,532 and $1,537, with support back at $1,518 and the 50-day moving average of $1,513.
"Gold is off as a result of the stronger dollar," analyst John Meyer of Fairfax noted. "The situation in Greece continues to plague the eurozone and markets today [as] contagion fears increase, prompting renewed speculation over the interconnection of the debt crisis and the regions banking sector."
The dollar moved to its highest since May 26 at 1.4069 against the euro this morning. It has since pared advances but, at 1.4093, remains more than three quarters of a cent higher on the day.
Economic turmoil in Europe continued to reverberate across financial markets - Greece in particular. Prime Minister George Papandreou yesterday offered to resign amid widespread demonstrations in Athens and political deadlock, which could see the country fail to secure the latest tranche of financial aid as it battles to avoid default.
A cabinet reshuffle is scheduled for today in the latest attempt to pass austerity measures there.
The collapse in the euro, and concerns over the resolution of sovereign debt in the region, helped propel gold in euro-terms to its highest since May 26 at 1,083.30 per ounce this morning.
Elsewhere, a slew of yet more disappointing economic releases from the US on Wednesday exacerbated investor tension, with the NAHB housing index falling to its lowest since September last year and the Empire State manufacturing index falling to a seven-month low.
Lingering macroeconomic uncertainty is helping to keep flight-to-safety inflows into bullion well supported, broker Commerzbank noted, although news that India had raised interest rates again overnight in an effort to combat inflation has hampered prices.
US building permits and housing starts, Philly Fed manufacturing, current account and weekly unemployment claims numbers are due this afternoon. Another string of poor data - or indeed bearish macroeconomic developments in Europe or the US – could potentially send markets lower still.
In data this morning, eurozone CPI numbers for May came in at an expected 2.7 percent, flat from the previous month.
Overnight, Chinese CB leading index numbers showed growth of 0.2 percent in April, again raising fears of economic slowing there, while the previous reading was downgraded fractionally to show a 0.9-percent rise.
In other precious metals, the PGMs continued to trade under pressure as the rampant dollar and widespread risk aversion weighed.
Platinum swung to its cheapest since May 25 at $1,764 this morning and was last at $1,762/1,767, $13 lower. The metal has lost 3.5 percent so far this week to today's low.
Palladium shed $14 to $759/765 per ounce - it had fallen to levels not seen since May 31 at $761.50. It has shed 6.6 percent since Monday's open to today's low. Elsewhere, silver lost 22 cents to $35.38/35.43 per ounce.
