Gold holds near two week high and equities cap gains
Reuters reported that gold neared its highest level in more than two weeks but gains may be capped by a rally in equity markets and promising US jobs data that dampened speculation the Federal Reserve may boost monetary stimulus.
Bullion has slipped almost 12% so far this year, having posted annual gains in the past 12 consecutive years as easy monetary policy prompted investors to buy the precious metal to hedge against inflation and economic uncertainties.
Gold added USD 5.36 an ounce to USD 1,475.56 by 0317 GMT due to a stronger euro. It hit a high of USD 1,487.80 on Friday its highest since April 15, on safe haven buying spurred by a cut in interest rates by the European Central Bank and the Fed's decision to stick to its stimulus program.
Mr Joyce Liu an investment analyst at Phillip Futures, referring to a report from the Commodity Futures Trading Commission said that "The market is trying to test USD 1,487 and it has been tested twice. That might be the reason why the market is pushing up. On the other hand we have a slight improvement in funds holding of gold."
He said that "If you look at the technicals, gold is still in an upward correction. For it to go into the bull territory, we at least need to break USD 1,530. For me to confidently call it an upward trend, it needs to break USD 1,590. We are quite some way off."
The CFTC showed that hedge funds and money managers increased their bullish bets in gold futures and options in the week to April 30 as the price of the precious metal rallied 4.5% during the period. But daily outflows on exchange traded funds indicated investors were still jittery after gold's historic decline in mid April, when it plunged more than USD 200 over 2 days.
Source – Reuters
From 7 may.