Gold held steady below its record high on Tuesday after 11 days of consecutive gains, as growing sovereign debt worries on either side of the Atlantic continued to support sentiment.
Gold’s appeal as safe haven is likely to extend, as euro zone’s debt crisis is far from being solved, while the White House was pursuing a fallback plan with Congress to raise the US debt ceiling and avert a default that could plunge global financial markets into chaos.
Spot gold was little changed at $1,602.41 an ounce by 0325 GMT, off the record high of $1,607.01 reached on Monday. US gold was almost steady at $1,603.20. “If we do see some progress in the debt ceiling talks, it could encourage profit-taking by short-term investors,” said Ong Yi Ling, an analyst at Phillip Futures. The markets were also closely monitoring developments in Europe, where governments and banks struggled to reconcile competing proposals for a second bailout of Greece on Monday, three days before leaders meet to prevent the crisis from spreading through the region.
For the longer term gold’s outlook remained bright, targeting $1,650 to $1,700 by the end of the year, Ong added.
Gold has rallied for the last 11 sessions, its longest winning stretch in at least four decades. But technical analysis suggested that gold could face a sharp correction once hitting a short-term target of $1,613, market analyst Wang Tao said. Investment interest in bullion grew as prices pushed higher. Holdings in the SPDR Gold Trust , the world’s biggest gold-backed exchange-traded fund, gained 1.1 percent to 1,249.352 tonnes by July 17, highest in six months. On Asia’s physical market, scrap sellers took advantage of record prices and buyers stood on sidelines, dealers said.
“Buyers are hesitant and waiting for a correction to re-enter the market,” said a Singapore-based dealer, adding that premium for gold bars had halved from a week earlier to around 50 cents an ounce over London spot prices. Spot silver fell 0.7 percent to $40.24 an ounce, off Monday’s high of $40.70 — its loftiest level since May 4. US silver edged down 0.2 percent to $40.28. The gold-silver ratio, used to measure how many ounces of silver can buy an ounce of gold, dropped to 39.58 on Monday, its lowest since May 10. It was hovering below 40 on Tuesday.
