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Gold recovers on firmer oi
Gold recovered Thursday from a 13-month low overnight in Asia, as an uptick in oil prices counterbalanced the stronger dollar, which is denting the precious metal’s appeal as an alternative investment.
Spot gold was quoted at US$727.05/729.55 an ounce at 0917 GMT, against $727.65 late in New York on Wednesday. Earlier it touched a low of $718.20, its weakest since September 2007.
Crude bounced back after a 7.5 percent fall on Wednesday as investors focused on expectations oil cartel OPEC will opt to cut output at its emergency meeting on Friday.
However, a number of factors still count against gold.
“On the one hand there is the dollar, and on the other we have recession fears weighing down on gold,” said Commerzbank analyst Barbara Lambrecht.
The dollar hit a fresh two-year high against the euro as worries over the outlook for the global economy sparked a flight to safety among investors.
The dollar is usually considered the most important external driver of gold. In addition to lessening bullion’s appeal as a currency hedge, a stronger US currency makes dollar-priced gold more expensive for holders of other currencies.
“The US dollar (is firming) against the euro on continued speculation of further rate cuts,” said investment bank Dresdner Kleinwort in a research note.
“As long as recession fears prevail and investors remain jittery, gold and other metals are likely to remain under pressure,” it said.
Gold prices have gyrated in recent months as financial markets have slumped. The World Gold Council said price volatility spiked in the third quarter, rising to 39 percent from 23 percent the quarter before.
Local gold prices
Vietnamese gold prices hit a yearly low Thursday while still remaining higher than world prices.
At the Saigon Jewelry Company (SJC), the country’s largest gold trader, the price dropped to VND16.75 million ($997) a tael, or $830 per ounce. A tael is equal to 37.5 grams or 1.2 ounces.
During the day, the price dipped to as low as VND16.5 million, the lowest level this year.
The precious metal had breached the VND17 million mark Wednesday for the first time since September 18.
Investors are hoping gold prices will drop further and have not been buying much. The Saigon Jewelry Company said it sold around 9,000 taels Thursday.
The figure had been 13,000 taels on March 17 when gold rose to an all-time high of VND19.45 million.
“Sentiment remained surprisingly weak in the precious metal markets,” Natalie Robertson, analyst at ANZ Banking Group Ltd., said in a report Thursday.
“Central bank bailout packages did very little to suppress the panic, with investors appearing to be selling even precious metal positions to fund short-term cash requirements in falling equity markets.”
Huynh Trung Khanh, deputy chairman of the Vietnam Gold Trading Association, said there is a gap between Vietnamese and world prices because the domestic market is no longer connected to the global market.
Vietnam has recently stopped importing gold, a move that was part of the government’s measures to curb the trade deficit.
Thanhnien
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