By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Gold prices traded marginally higher on Tuesday, as global growth concerns and nervousness ahead of the corporate-earnings season preoccupied traders.
Gold for December delivery GCZ2 -0.04% rose $1.30 to $1,777 an ounce on the Comex division of the New York Mercantile Exchange.
Gold dropped $5.10, or 0.3%, on Monday to settle at $1,775.70 an ounce, after the World Bank downgraded its growth forecast for Chinese growth.
Metals traders watched movements in the currency markets.
The ICE dollar index DXY +0.18% , which measures the dollar against a basket of six currencies, rose to 79.692, compared with 79.595 in late North American trading on Monday. The dollar had found support after the International Monetary Fund cut its global growth forecasts and warned of the potential for a worldwide slowdown.
The IMF on Tuesday cut its 2012 global-growth forecast to 3.3% from 3.5% in July, and the 2013 forecast to 3.6% from a prior forecast of 3.9%, owing to lower growth prospects and increased risks. Read more about the IMF's new forecasts
Also on Tuesday, the People’s Bank of China injected a big dose of liquidity to help ease tight money conditions. That move strengthened hopes for more policy easing from the central bank. PBOC’s Zhou pledges flexible, pre-emptive policy
Analysts at Commerzbank said in a research note that markets seem to be recognizing that chances of cheap central bank liquidity will improve if global growth continues to slow. Gold has gained this year largely due to central-bank efforts to keep monetary policy loose.
“The chance of unlimited, cheap central bank liquidity and strong exchange-traded-fund inflows suggest that the price might soon rise towards $1,800,” the analysts wrote. Continuing strikes in the South African gold sector are another supportive factor, they noted.
They pointed out that currently there are strikes at mines owned by AngloGold Ashanti Ltd. AU +1.35% ZA:ANG +4.62% , Gold Fields Ltd. ZA:GFI +1.95% , and Harmony Gold Mining Co. ZA:HAR +1.91% HMY +1.40% .
The Commerzbank analysts said while South African gold production has been on the wane, the nation was still the fifth-largest gold producer last year.
“Every ounce which is lost to strikes exacerbates the supply bottlenecks, and since the beginning of September, ETFs have been absorbing virtually half of the global mine production during this period,” they said.
Platinum, where South Africa has a much more important market share, remains well supported by strikes that continue to spread, lately to Xstrata PLC’s UK:XTA +1.39% Eland mine, the analysts said.
January platinum futures PLF3 +0.12% rose $4.20 to $1,703 an ounce, while palladium for December delivery PAZ2 +0.60% rose $4.20, or 0.6%, to $661.15 an ounce.
Silver erased losses, with the December futures contract SIZ2 -0.17% up 3 cents to $34.05 an ounce.
December copper futures HGZ2 +0.28% rose 2 cents to $3.74 a pound.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
