RTRS: PRECIOUS-U.S. gold gains 1 pct on euro; equities weigh
By Lewa Pardomuan
SINGAPORE, Oct 5 (Reuters) - U.S. gold futures gained 1
percent to above $1,630 an ounce on Wednesday, driven by a
return to bargain hunting after prices dropped the previous day,
while purchases from jewellers helped the precious metal shrug
off a volatile euro.
But another round of selling in equities could cap gains,
as bullion's erratic behaviour in recent weeks suggested the
metal was unsure about its role in the financial market despite
lingering worries about the debt crisis in Europe.
Gold rallied to a lifetime high around $1,920 in early
September after the euro tumbled on doubts over Europe's ability
to solve the crisis, but it then plunged to a two-month low
around $1,534 last week as investors cashed in the metal to
cover losses in equities.
"It can't make up its mind mainly because investors, the
people who are actually doing the buying and selling, haven't
also made up their minds whether gold is treated as a safe haven
and, therefore, should follow that status," said Song Seng Wun,
a regional economist at CIMB Research in Singapore.
"At this moment, it looks like some are still debating
whether safe haven, in the most current environment, is just
essentially the U.S. dollar and (whether) U.S treasuries include
or exclude gold."
U.S. gold GCcv1 added $12.1 an ounce to $1,628,1 by 0626
GMT, after rising as high as $1,636.50 ounce on early gains in
the euro. Spot gold rose $7.77 an ounce to $1,627.69 an
ounce.
Stocks in Asia trimmed earlier gains as investors were
sceptical about whether European leaders are going far enough in
their efforts to stop the region's sovereign debt woes from
sparking a full-blown banking crisis.
The euro faltered as macro funds and Tokyo exporters piled
pressure on it by taking profits after an overnight rally, but
charts suggested recent heavy selling could ease for now.
European finance ministers agreed on Tuesday to safeguard
their banks as doubts grew about whether a planned second
bailout package for debt-laden Greece would go ahead.
Light physical buying kept premiums steady at $2 an ounce to
spot London prices in Singapore, the highest since February.
Markets in Hong Kong were closed for a holiday.
"I think supply is going to be tight until the end of
October. It's difficult to generate enough stocks without any
selling back from the market," said a physical dealer in
Singapore.
"Well, I think if the price stays at this level, then the
demand will be around until the end of this year."
Physical demand has picked up across Asia after recent
declines in gold prices, leading to tight supply of gold bars in
Singapore and Hong Kong.
In other markets, copper rose more than 1 percent after
comments by the U.S. Federal Reserve that it was ready to take
more steps to help a struggling U.S. economy helped prices
recover from a five-day slide.
Brent crude rose above $101 on Wednesday, snapping a
three-day losing streak, after the Federal Reserve promised to
launch more measures to help the fragile U.S. economy and
European finance ministers agreed to safeguard their banks.
