Platinum’s seven-day rally ends as Amplats concern eases
SINGAPORE — Gold traded steady on Thursday as investors, concerned about the duration of ultra-loose monetary policy, refrained from betting big, while easing concern about immediate supply shortages from South Africa clipped platinum’s seven-day rally.
Signs of recovery in the US economy supported metals with wide industrial usage such as platinum and palladium, but weighed on gold as concern about the necessity of long-term monetary stimulus looms.
Investors will be watching US housing data later in the day, as well as economic growth numbers from China on Friday.
Earlier this month, Fed meeting minutes showing concern about the side effects of monetary stimulus hammered gold prices, as an exit from the loose monetary policy would tarnish the metal’s appeal as an inflation hedge during a period of rampant central bank cash printing.
"If growth continues to be really good, it could shift central banks’ bias from easing to tightening, which would not be good for the precious metals complex," said Jeremy Fries, commodity strategist at Société Générale in Hong Kong.
But the US debt ceiling issue, which would force the world’s top economy to default on its debt as early as mid-February if legislators fail to agree to raise the borrowing limit, might support gold’s safe-haven appeal, he said. "Right now the market isn’t sure which direction to go."
Gold investment, fuelled by negative real interest rates and concern about debt, is expected to drive prices to a record average high this year, according to Thomson Reuters GEMS.
Spot gold had inched up 0.1% to $1,681.30 an ounce by 7.33am GMT, trapped in a tight range of less than $6.
US gold edged down 0.1% to $1,681.
Technical analysis suggested that spot gold has abandoned a bullish target at $1,701 an ounce as it failed to maintain momentum, said Reuters market analyst Wang Tao.
Physical buying interest ebbed in Southeast Asia, dealers said.
"Buying has slowed as prices are once again locked in a range," said a Singapore-based dealer.
Spot platinum lost 0.4% to $1,677, pulling away from a three-month high of $1,699.50 hit earlier in the week.
Anglo American Platinum (Amplats) miners have returned to work after an illegal walkout to protest the world’s top platinum producer’s plan to cut jobs and close mines.
Potentially tempering the sentiment in platinum, demand for new cars in recession-bound Europe fell to a 17-year low in 2012, leaving mass market manufacturers little hope for this year as they try to cut costly excess factory capacity and aggressive discounting dents their margins.
Platinum usage in Europe’s automotive industry accounted for 18% of the world’s total demand for the metal in 2011, data from refiner Johnson Matthey showed.
Spot palladium inched down 0.4% to $718.50, easing from a near 16-month high of $724.50 hit in the previous session.