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Singapore - Gold held near two-week highs on Monday, clinging on to gains from the previous session's short-covering rally, on a softer dollar.
Spot gold held steady at $1 187.20 an ounce by 09:24, after earlier climbing to a two-week high of $1 193.95. That followed a 2.3% jump on Friday that took the metal above a key technical level of $1 180.
The dollar swung wildly against the yen on Monday, initially spiking to a seven-year high after data showed Japan's economy unexpectedly slipped into recession before pulling back as the grim economic news sent Tokyo stocks tumbling. The greenback also eased against a basket of major currencies.
READ: Shock Japan recession a blow to global economy
"A lot of new shorts were put into gold after we broke below $1 180 and as we came back through it, there was some short-covering," said a Hong Kong-based trader with a bullion bank.
"The $1 180 level is still the one that everyone is looking at and if we hold that, we could go up to $1 230."
However, the way higher may not be an easy one for bullion as the factors that brought down gold in the last few weeks to its lowest in four-and-a-half-years have not gone away.
The dollar remains in favour with investors as US data has been pointing towards a recovery, and the yen and euro have been weaker against the dollar.
A stronger dollar and economic optimism could take the appeal off gold, often seen as an alternative investment to riskier assets. A robust economy could also prompt the US Federal Reserve to soon raise interest rates, hurting non-interest-bearing gold.
Bearish sentiment among investors prevailed. Speculators in gold futures and options slashed their long bets for a third straight week, according to the Commodity Futures Trading Commission.
Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the third quarter, but legendary investor George Soros has sharply cut his stake in Barrick Gold Corp and several gold mining company ETFs.
Latest data showed that the outflows from the SPDR fund paused on Friday after eight straight days, but holdings of the fund remain near six-year lows.
Spot gold held steady at $1 187.20 an ounce by 09:24, after earlier climbing to a two-week high of $1 193.95. That followed a 2.3% jump on Friday that took the metal above a key technical level of $1 180.
The dollar swung wildly against the yen on Monday, initially spiking to a seven-year high after data showed Japan's economy unexpectedly slipped into recession before pulling back as the grim economic news sent Tokyo stocks tumbling. The greenback also eased against a basket of major currencies.
READ: Shock Japan recession a blow to global economy
"A lot of new shorts were put into gold after we broke below $1 180 and as we came back through it, there was some short-covering," said a Hong Kong-based trader with a bullion bank.
"The $1 180 level is still the one that everyone is looking at and if we hold that, we could go up to $1 230."
However, the way higher may not be an easy one for bullion as the factors that brought down gold in the last few weeks to its lowest in four-and-a-half-years have not gone away.
The dollar remains in favour with investors as US data has been pointing towards a recovery, and the yen and euro have been weaker against the dollar.
A stronger dollar and economic optimism could take the appeal off gold, often seen as an alternative investment to riskier assets. A robust economy could also prompt the US Federal Reserve to soon raise interest rates, hurting non-interest-bearing gold.
Bearish sentiment among investors prevailed. Speculators in gold futures and options slashed their long bets for a third straight week, according to the Commodity Futures Trading Commission.
Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the third quarter, but legendary investor George Soros has sharply cut his stake in Barrick Gold Corp and several gold mining company ETFs.
Latest data showed that the outflows from the SPDR fund paused on Friday after eight straight days, but holdings of the fund remain near six-year lows.
