Picture: REUTERS
Picture: REUTERS

LONDON — Gold firmed on Thursday, supported by dollar weakness and ongoing concern about US debt talks, while a slight easing of South African supply worries sapped platinum’s rally.

Spot gold rose 0.2% to $1,682.40 an ounce by 11.47am GMT, trapped in tight ranges after stronger technical momentum subsided.

Spot platinum was flat at $1,682.86, pulling back from a three-month high of $1,699.50 hit on Tuesday.

Earlier this week, US rating agency Fitch said the US faced a "material risk" of losing its AAA status if there is a repeat of the wrangling seen in 2011 over raising the country’s self-imposed debt ceiling.

"The broader debate that is going to happen in the US in the run-up to the debt ceiling crisis point at the end of February is going to be supportive of gold. Talks of downgrades from the major rating agencies will be part of it," Credit Suisse analyst Tom Kendall said.

"This focuses people’s attention on the longer-term stability of the US debt situation and gets the market thinking about the longer-term value of the US dollar and benefits gold."

On the data front, investors will be watching US housing numbers later in the day, as well as economic growth figures from China on Friday.

Dealers said physical buying interest, which had been strong at the start of the month in several Asian countries, ebbed.

"What we did see in the gold dips was strong physical demand across the Asian world including Thailand and India but since the rally back to current levels the physical market has definitely slowed," INTL Commodities CEO Jeff Rhodes said.

Platinum rally erased

Anglo American Platinum (Amplat) miners returned to work after an illegal walkout to protest against the world’s top platinum producer’s plan to cut 14,000 jobs, close two mines and sell another.

But analysts were still sounding positive about platinum group metals, with platinum staying close to parity with bullion as demand for use in auto emissions was seen improving in China and the US amid constrained supply.

"Potential for further supply shocks in the platinum group metals does have all the ingredients for an interesting few weeks in terms of prices," Mr Rhodes said.

"I think the premium of platinum over gold, once it gets through parity, it will pick up momentum and there is a significant chance of platinum moving back to a normal type of premium of at least $100," he said.

Spot palladium was up 0.2% at $724 an ounce, close to a 16-month high of $724.50 hit in the previous session.

Silver stood at $31.47, up 0.1%, mirroring gold’s upward move.