[miningmx.com] — SPOT gold struggled to breach $1,600 an ounce on Tuesday, as investors remained nervous over the progress of the euro zone’s efforts to rein in its debt crisis, while resilient physical buying interest supported
prices.
Asian stocks and the euro held steady, but sentiment remained fragile on concerns that efforts to contain the euro zone debt crisis were faltering and tougher rules to strengthen banks’ capital would further undermine their profits.
Euro zone ministers agreed on Monday to boost IMF resources by €150bn to ward off the debt crisis and won support for more funds from EU allies, but it was unclear if the bloc would reach its €200bn target after Britain bowed out.
“The market is very choppy due to thin volume,” said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong. “The focus of the market is still Europe.”
The European Central Bank said the risks to financial stability in the euro zone had increased considerably in the second half of this year, but a break-up of the single currency bloc was unthinkable.
There was light buying on the physical market, but most market participants have moved to the sidelines of the market ahead of the year-end, he added.
Spot gold edged up 0.4% to $1,599.34 an ounce by 07:02 GMT, after piercing above $1,600 briefly earlier in the day. US gold inched up 0.3% to $1,601.80.
GOLD BAR PREMIUMS RISE
Premiums in Asia’s gold hubs increased on reducing supply during the holiday season, as well as resilient buying interest as prices struggle to recover after last week’s dip.
Buying interest surged last week when cash gold dropped to $1,560, its lowest in nearly three months.
In Hong Kong, gold bar premiums increased to $2 to $2.50 an ounce over spot prices, from 50 cents to $1.50 a week earlier, dealers said.
“Refineries in the west will be closed and no more stocks will arrive, which is driving up the premiums,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers.
Spot palladium led the precious metals complex with a 0.8% rise, to $609.
Spot platinum edged up 0.4% to $1,411.93. The Relative Strength Index just climbed above 30, after wallowing below the that mark in the oversold territory for a week.
