LONDON – Gold prices steadied above $1,400 an ounce on Tuesday as the dollar surrendered earlier gains versus the euro and ongoing violence in North Africa fuelled interest in the metal as a haven from risk. Libyan leader Muammar Gaddafi used tanks, helicopters and warplanes to fight a growing revolt in the country as protests raged, following uprisings that have toppled leaders in Tunisia and Egypt.
Spot gold was bid at $1,402.19 an ounce, against $1,405.95 in New York on Monday, having earlier fallen as low as $1,392.54. US gold futures for April delivery were up $13.50 from Friday’s settlement to $1,402.10. “Bullion prices continue to draw support from ongoing unrest in the Middle East/North Africa region, also (from) a small dollar pullback this afternoon,” said Andrey Kryuchenkov, an analyst at VTB Capital.
“Safe-haven buying remains the key driver behind the recent rally as players seek to offset currency and sovereign risk,” he added. “The uptrend is well intact, with the market quickly nearing key resistance around January (highs) and all-time highs.” Spreading unrest in the Middle East fuelled six straight days of rising gold prices through Monday. A surge in the dollar earlier in the day pulled prices back from seven-week highs, but they have since recovered much of their early losses.
The dollar steadied against the euro as hawkish comments from a European Central Bank official helped the single currency, though the dollar is expected to benefit from ongoing risk aversion as violence in Libya flares. German debt rallied and lower-rated euro zone sovereign bonds came under pressure as intensifying violence there prompted investors to shift into safe-haven assets, with the Swiss franc also continuing a rise.
EQUITIES RETREAT: European shares extended the previous session’s steep decline as violence in Libya exacerbated worries about unrest spreading further across the region, while U.S. stock futures pointed to a lower opening on Wall Street. “Geopolitical tensions in the MENA region continue to fester, keeping risk aversion elevated (as evident in the poor performance of equities across the globe) and enhancing the appeal of safe-haven assets,” Standard Bank said in a note.
“In addition, the surge in oil prices is keeping fears of rising global inflation alive.” Gold is still 2 percent below December’s record high of $1,430.95 an ounce, but dealers in Asia reported a pick-up in sales of scrap after the spot price’s near-4 percent rise over the prior six sessions. Silver came under pressure in line with other industrial commodities, falling by as much as 4.3 percent to a low of $32.39 an ounce, as investors closed positions following a three-day rally that lifted prices by nearly 4 percent.
It was later bid at $33.22 an ounce. The price hit its highest since early 1980 at $34.30 an ounce earlier on Tuesday, driven by limited supplies for near-term delivery and the prospect for rising demand as the wider economy recovers. The gold-silver ratio, which shows how many ounces of silver can buy one ounce of gold, rose to around 42 from Monday’s 13-year low near 41.
Gold steadies over $1,400
