WSJ:PRECIOUS METALS: Gold Falls In Asia; Traders Expect Limited Decline
By Arpan Mukherjee
Of DOW JONES NEWSWIRES
WELLINGTON (Dow Jones)--Gold fell in Asia Monday, tracking the euro lower as investors worried about the outcome of a key meeting of European leaders on the euro-zone debt crisis, but traders said they expected physical buying to provide near-term support around $1,600/oz.
Sentiment was weak ahead of a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Berlin later in the global day. They are expected to discuss measures to enhance fiscal discipline among euro-zone member states.
At 0534 GMT, spot gold was at $1,609.50 a troy ounce, down $7.10, or 0.4% lower from its close on Friday.
The euro touched a 15-month low against the U.S. dollar Monday, before paring its loss to trade at $1.2710, compared with $1.2716 late Friday in New York.
When the dollar strengthens dollar-denominated commodities are more expensive for buyers using other currencies.
"We are seeing some fund selling," said Peter Fung, director of Wing Fung Precious Metals.
Gold touched $1,620.03/oz, the high for the session, in early trade as Chinese buyers stepped in, Fung said.
However, physical buying in India, one of the world's biggest buyers of gold, has yet to pick up, despite the approach in south India of Pongal, a four-day festival celebrating the end of winter. The festival starts on Friday.
In India, sales usually pick up ahead of festivals and weddings, when gold jewelry is commonly given as a gift.
"Sales are down by 40%-50% [in south India this year] compared to the previous year," Daman Prakash, director of MNC Bullion, said from Chennai.
Gold remained "high in the top tier" of preferred commodities in 2012, Goldman Sachs said in a note to clients, "simply because of the extremely uncertain macroeconomic outlook currently faced in many parts of the world."
Silver will likely find major support at $26.10-$26.40/oz, ScotiaMocatta said in a note to clients, adding that it found support at that level on three occasions in 2011.
At 0534 GMT, spot silver was at $28.65/oz, down 10 cents, with platinum and palladium both down $4 at $1,399/oz and $609/oz, respectively.
Platinum and palladium prices are expected to average $1,725/oz and $600/oz, respectively, in 2012, Goldman Sachs said, adding that it expected the market to tighten "appreciably" in subsequent years as global car production recovers.
-By Arpan Mukherjee, Dow Jones Newswires; 64-4-471-5990; arpan.mukherjee@dowjones.com
