SINGAPORE — Gold reversed early gains in volatile trade on Thursday, lacking the impetus to rise further despite a weaker dollar as gold holdings in bullion exchange-traded funds (ETFs) fell to their lowest since early 2009.
Bullion prices have been range-bound in May, torn between a pick-up in physical demand after prices plunged to a more than two-year low in mid April and a lack of interest from investors who are shifting their money into equities as Wall Street gains.
Gold hit a high of $1,475.51 an ounce and stood at $1,471.10 by 6.24am GMT, down $1.09. It has rebounded more than $100 from its April trough, but is still well below the psychological level of $1,500.
"Sentiment is pretty much mixed. People are not quite sure which way we will go. There’s selling on ETFs and physical buying. I guess, we are still in range of $1,440 to $1,500," Standard Bank branch manager Yuichi Ikemizu said in Tokyo.
"As long as it is in $1,400 (range), I guess there’s still very good buying interest."
US gold for June was at $1,470.10 an ounce, down $3.60.
Cash and US gold futures plunged to around $1,321 on April 16, their lowest in over two years, after concern about central bank sales and a drop below $1,500 led to a sell-off that stunned investors, prompting them to slash ETF holdings.
SPDR Gold Trust, the world’s largest gold-backed ETF, said its holdings fell 0.60% to 1,051.47 tonnes on Wednesday from 1057.79 tonnes on Tuesday.
The physical market was mixed in Asia, with dealers in Singapore noting a slowdown in buying interest and those in Hong Kong reporting a shortage in the supply of gold bars that kept premiums at multimonth highs.
"We suspect that the pace of buying has cooled from the frenzied pace evident last month, when gold prices were about $100 an ounce cheaper," said Edward Meir, a metals analyst at futures brokerage INTL FCStone.
"Those sitting on the fence and waiting for cheaper prices may yet have another shot at getting back in."
Wall Street’s extended record run and a surge in Asian shares to a nearly two-year peak is expected to lure investors seeking better returns away from gold, which has shed 12% so far this year after rising for the past 12 years.
In the US, the US Mint will limit dealers’ purchases of its America the Beautiful five-ounce silver bullion coins when they go on sale next week, reflecting soaring physical demand.
