Singapore - Gold edged up on Monday after a sharp correction
in the previous session, buoyed by a stronger euro and physical buying from
China, while expectations of aggressive monetary easing in Japan also lent
The euro rose 0.4% in its third day of gains, after the
European Central Bank kept interest rates unchanged and its chief struck a more
optimistic tone on the region's economic recovery late last week.
The dollar dropped to its lowest level since the beginning
of the year. A weaker greenback makes dollar-priced commodities more attractive
for buyers holding other currencies.
But moves in the currency market have done little to change
the sluggish mood in the gold market, with analysts expecting bullion to range
between $1 660 and $1 680 an ounce until investors get a better clue to the
health of the global economy and the direction of central banks' monetary
Speculators cut their net long positions in gold to a
four-month low in the week to January 8, data from the US Commodity Futures
Trading Commission showed.
Buying from China helped support sentiment.
"We see a fair amount of buying from China after gold
prices fell last Friday, and the yuan hit a record high (against the dollar),
making local prices cheap," said Peter Tse, director at ScotiaMocatta.
"Having said that, gold is still range-bound and I
wouldn't put too much on this morning's rise until liquidity returns when the
European market returns."
Spot gold inched up 0.1% to $1 664.04 an ounce by 03:21 GMT,
after edging up 0.3% last week.
US gold gained 0.2% to $1 664.20.
Technical analysis suggested spot gold is expected to be
neutral so long as it remains in the range of $1 653-$1 678 an ounce, said
Reuters market analyst Wang Tao.
Japan's Prime Minister Shinzo Abe stepped up pressure on the
Bank of Japan to further ease its monetary policy, asking the BoJ to set a
medium-term inflation target.
The prospects of a weaker yen in the wake of aggressive
monetary easing in Japan pushed benchmark gold on the Tokyo Commodity Exchange
to a record high on Friday, and fuelled hopes for fresh interest in bullion
from Japanese investors, who have been avid gold sellers during the metal's
bull run in the past few years.
Japan's markets were closed on Monday for a public holiday.
Platinum and palladium extended gains from the last session,
tracking higher risk appetite in the market. Spot platinum rose 0.3% to $1
632.75, on course for a fifth day of gains, matching a similar run in November.
The platinum-gold ratio rose to a nine-month high of 0.98,
after platinum's three-week winning streak.
Spot palladium gained 0.6% to $701.36, also headed for its
fifth day of increases, its longest winning run since early October.
Investors await a string of data this week, including
housing and retail numbers from the United States and economic growth for the
last quarter of 2012 from China. Upbeat data could further fuel a rally in platinum
group metals, mainly used in industrial applications.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.