Gold climbs for 2nd day on safe-haven buying
Gold edged higher for a second session on Thursday as worries over Europe and Egypt prompted safe-haven buying, but the mood remained cautious ahead of US jobs data that could determine the outlook for the Federal Reserve’s stimulus measures.
Bullion has gained nearly 2 per cent so far this week after posting its biggest quarterly loss on record, helped as well by short covering and bargain hunting.
The last two days it has been boosted by political turmoil in Portugal, where talks over the government’s future threatened to reignite the euro-zone crisis, and by the ousting of Egypt’s President Mohamed Mursi by the army.
“It is typical safe-haven buying,” said a Hong Kong-based trader. “But we don’t know if the upside will continue. The nonfarm report tomorrow is important for gold.”
US nonfarm payrolls data due on Friday could determine when the Federal Reserve would begin tapering its US$85 billion monthly bond buying stimulus.
Investors were also on the sidelines due to the US Independence Day holiday on Thursday, the trader said.
Spot gold rose 0.3 per cent to US$1,254.59 an ounce by 0352 GMT, after gaining almost 1 per cent on Wednesday. Comex gold rose US$3 to US$1,254.90.
Gold has fallen sharply since Fed Chairman Ben Bernanke said last month the US economy was recovering strongly enough for the central bank to begin tapering its stimulus in the next few months, and possibly end the programme in mid-next year.
The metal fell to nearly a three-year low of US$1,180.71 last week and is down 25 per cent for the year.
Despite the lower prices, physical demand is not as strong as expected, dealers have said.
Gold demand in India, the world’s biggest buyer of the metal, remained lukewarm on Wednesday as a drop in the rupee lifted local prices by more than one per cent amid restrictions by the central bank on gold imports.
In China, consumers are put off by fears of a cash crunch and are waiting for another drop in gold prices.
“Our coin dealers in Australia have seen a good response to this recent drop. But it is not the same response as we got in April,” said Bron Suchecki, manager of analysis and strategy at the Perth Mint.
The mint’s depository business was not seeing significant liquidations but the inflows have dropped off, he said.
