Gold, little changed in London today, may climb as concern about the soundness of Greece's public finances boosts the metal's appeal as a haven. Palladium and platinum rose to the highest prices in at least 17 months.
European finance ministers meet today to discuss Greece's budget deficit. The country's worsening finances last month prompted credit-rating companies to cut its creditworthiness. The US Dollar Index, a six-currency gauge of the greenback's strength, fell as much as 0.3 per cent today. Gold typically moves inversely to the dollar.
``The market is very concerned about the situation in Greece,'' said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. ``Gold is having speculative interest, rather than real physical demand.''
Gold for immediate delivery added $US2.65, or 0.2 per cent, to $US1,133.57 an ounce at 4:38 p.m. local time, paring a climb of as much as 0.6 per cent. Bullion for February delivery gained 0.3 per cent to $US1,133.50 in electronic trading on the New York Mercantile Exchange's Comex division. Floor trading is closed today for the Martin Luther King Jr. holiday.
The metal declined to $US1,134.50 an ounce in the afternoon ``fixing'' in London, used by some mining companies to sell production, from $US1,135.75 at the morning fixing.
Gartman sees `upside'
``We see the recent consolidation pattern that has evolved since early January between $US1,120 and $US1,160 to be a consolidation that should resolve itself eventually with prices breaking to the upside,'' Dennis Gartman, a Suffolk, Virginia- based economist and hedge-fund manager, told clients in his Gartman Letter today.
Greece on Jan. 15 presented the European Commission with a three-year budget plan that includes deficit-reduction measures for this year to bring down Europe's biggest budget shortfall. The country won't default on its debt or abandon Europe's single currency, Luxembourg's Jean-Claude Juncker, who heads the group of euro-area finance ministers, said that day.
The US dollar index has slipped 1 per cent this year after a 4.2 per cent drop in 2009. The currency slumped last year as the Federal Reserve held interest rates near zero to revive the US economy and investors favored higher-yielding currencies and assets on expectations of a recovery from the world recession.
``Silver and gold are currently mainly driven by investment demand, and thus react more sensitively to changes in the dollar,'' Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a note today.
SPDR Holdings
Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell for a second day, slipping 0.91 metric ton to 1,112.84 tons on Jan. 15, according to the company's Web site.
Palladium rose for a fourth day, heading for the longest rally since Nov. 16, 2009. The metal for immediate delivery climbed as much as 1.1 per cent to $US460.02 an ounce, the highest price since July 2008, and was last at $US458.50. Platinum added as much as 1.8 per cent to a 17-month high of $US1,628.50 an ounce and last traded at $US1,623.75. Both metals are used in catalytic converters that curb pollution from vehicles.
``Platinum and palladium are more closely linked to the business cycle than gold and silver, due to their heavy use in the car industry,'' Graber said. ``Given that we expect a continued recovery in global economic activity, we still think that platinum and palladium are likely to continue outperforming gold and silver over coming months.''
Palladium held in ETF Securities Ltd.'s exchange-traded commodities products rose 2.6 per cent to a record 679,938 ounces on Jan. 15, according to the company's Web site. Silver holdings added 226 ounces to a record 24.334 million ounces.
Silver for immediate delivery in London gained 1.1 per cent to $US18.615 an ounce.
Source: Sydney Morning Herald
