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London/Singapore - Gold dipped on Wednesday, tracking industrial metals and equities, as concerns about global economic growth and Iran’s threat to stop the flow of oil kept investors on the sidelines.
Latest data out of the United States sent mixed signals on the health of the world’s largest economy. Improving labour market conditions lifted consumer confidence to an eight-month high in December, but persistently weak house prices remain an obstacle to faster economic growth.
Spot gold was down 0.1 percent at $1,590 an ounce at 1146 GMT. U.S. gold was off 0.14 percent to $1,592.80.
Iran’s threat put world shares on the back foot, and industrial metals eased in thin holiday trade.
“Gold is still tightly correlated with equities markets, but also risk aversion is not at the levels we saw in early August when gold de-coupled from everything else and traded with the dollar,” VTB Capital analyst Andrey Kryuchenkov said
“It’s more uncertainty than outright panic selling,” he added.
Although gold traditionally has a safe-haven appeal, the euro zone debt crisis is threatening the global economy, causing a liquidity shortage in markets and forcing investors to abandon their gold positions to cover losses elsewhere.
The dollar was almost flat against a basket of currencies , with the euro hovering around an 11-month low against the U.S. currency. A stronger dollar often encourages non-U.S. holders of gold to sell the metal to lock in a higher profit in their own currencies.
Technical analysis suggested that spot gold could fall to $1,569 during the day, Reuters market analyst Wang Tao said.
Italian debt auctions this week are also making investors nervous.
Italian short-term debt costs halved at auction on Wednesday as a new austerity package and cheap long-term liquidity from the European Central Bank won Rome some respite in thin year-end markets.
But analysts warned markets tensions could easily reignite and pointed to a new test on Thursday, when Italy will sell up to 8.5 billion euros of longer-term bonds, including three- and ten-year paper.
Asia’s physical market was lacklustre in the final week of the year, with premiums steady in Singapore and Hong Kong, dealers said.
“There is not too much activity as prices circle around the $1,600 level,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong, but added that buying from China had been steady.
Latest data out of the United States sent mixed signals on the health of the world’s largest economy. Improving labour market conditions lifted consumer confidence to an eight-month high in December, but persistently weak house prices remain an obstacle to faster economic growth.
Spot gold was down 0.1 percent at $1,590 an ounce at 1146 GMT. U.S. gold was off 0.14 percent to $1,592.80.
Iran’s threat put world shares on the back foot, and industrial metals eased in thin holiday trade.
“Gold is still tightly correlated with equities markets, but also risk aversion is not at the levels we saw in early August when gold de-coupled from everything else and traded with the dollar,” VTB Capital analyst Andrey Kryuchenkov said
“It’s more uncertainty than outright panic selling,” he added.
Although gold traditionally has a safe-haven appeal, the euro zone debt crisis is threatening the global economy, causing a liquidity shortage in markets and forcing investors to abandon their gold positions to cover losses elsewhere.
The dollar was almost flat against a basket of currencies , with the euro hovering around an 11-month low against the U.S. currency. A stronger dollar often encourages non-U.S. holders of gold to sell the metal to lock in a higher profit in their own currencies.
Technical analysis suggested that spot gold could fall to $1,569 during the day, Reuters market analyst Wang Tao said.
Italian debt auctions this week are also making investors nervous.
Italian short-term debt costs halved at auction on Wednesday as a new austerity package and cheap long-term liquidity from the European Central Bank won Rome some respite in thin year-end markets.
But analysts warned markets tensions could easily reignite and pointed to a new test on Thursday, when Italy will sell up to 8.5 billion euros of longer-term bonds, including three- and ten-year paper.
Asia’s physical market was lacklustre in the final week of the year, with premiums steady in Singapore and Hong Kong, dealers said.
“There is not too much activity as prices circle around the $1,600 level,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong, but added that buying from China had been steady.
