Gold held becalm on Monday after its greatest weekly loss in a month, but the metal was relieve at the hazard of dropping back under $1,200 an ounce as investors reticular over the result of a U.S. stimulus tapering. Prices were nourished in thin Asian trading as holdings of SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund, rose 5.40 tonnes to 814.12 tonnes on the first inflow since November 5.
“There seem to be subtle shifts in sentiments for more bullishness after $1,200 was damaged,” said Joyce Liu, an investment analyst at Phillip Futures Pte Ltd. “Still, the upside is finite due to year-end holiday season and with prices now treading similar to $1,200, a break below that level may shift market sentiments back to bearishness.”
Spot gold eased 0.1 percent to $1,201.25 an ounce by 0328 GMT. It rose 1 per cent on Friday on short covering after losing 4 per cent in the previous three sessions.
Gold drop 3 per cent last week after the Fed said the U.S. economy was tough enough to scale backward its large bond-buying input, winding down an era of easy money that saw gold assemblage to an all-time high of $1,920.30 an ounce in 2011. The metal has fallen nearly 30 per cent this year on fears that a scale backwards of stimulus would hurt its inflation-hedge appealingness. The decline this year is gold’s largest drop in 32 years.
Physical demand picked up in Asia as prices drop towards $1,200 last week but not to the same standard seen during earlier cost drops this year. Volumes traded on the Shanghai Gold Exchange on Monday were lower than last week’s as buyers waited to see if prices could cut more. Premiums remained steady at $16 an ounce.