Singapore - Gold prices edged higher on Thursday, building on three days of gains supported by inflation concerns that are pushing central banks to raise rates, while an ongoing debt crisis in the eurozone also underpinned sentiment.
China hiked rates by 25 basis points on Wednesday, and the European Central Bank is expected to follow suit later on Thursday.
“The rate move reignited the inflation issue and people
started to think that it is more of an issue than expected,” said Jonathan
Barratt, managing director at Commodity Broking Services in Sydney.
“We can safely agree that the $1 480 to $1 500 level has
been established as a medium-term support and chances that we break below it
towards the end of the year are pretty rare. We’ve found the bottom.”
Spot gold dipped briefly below $1 480 an ounce on July 1 to
a one-and-a-half month low of $1 478.01, but had risen 3.7% from this level to
$1 532.61/oz in morning trade.
It hit a two-week high of $1 533.45 in the previous session,
just over $40 below the record high above $1 575 seen at the start of May. US
gold edged up 0.3% to $1 533.20.
Investors are also watching the weekly initial jobless
claims and ADP employment reports from the United States, which will shed light
on the key monthly non-farm payrolls data due on Friday.
Technical analysis showed a supportive picture. Spot gold is
targeting $1 550, riding on the strong momentum built up in the past few
sessions, said Wang Tao, a Reuters market analyst.
Silver prices also pushed
higher. Spot silver rose to a two-week high of $36.26, before easing to $36.16.
US silver rose 0.8% to $36.20.
Supporting sentiment, a strike by about 8 000 workers at
Freeport-McMoRan Copper & Gold’s Grasberg mine in Indonesia, the world’s
top gold mine, entered its fourth day. Negotiations over pay have broken down
and mining has halted, a government official said.
Physical buyers have moved to the sidelines after prices ran
up about $55, or nearly 4%, in the past three sessions.
“We may see the market rest a little at the current level,
as people wait for further development in the eurozone’s debt crisis,” said a
Hong Kong-based dealer, adding that fund activity in gold has been limited,
making it difficult to stage a rapid rally.
Holdings in the SPDR Gold Trust , the world’s largest
gold-backed exchange-traded fund (ETF), remained unchanged at 1 205.809 tonnes, their
lowest since mid-June.
Holdings in the iShares Silver Trust , the world’s biggest
silver ETF, dropped to 9 532.4 tonnes, the lowest since September 2010.