Thursday, May 7, 2009

>Asia spot gold holds gains, weak USD supports

Sydney - Spot gold held gains above $900 a troy ounce Tuesday after more encouraging economic data releases in the U.S. boosted inflation concerns, and on a softer dollar.

Signs of a bottoming economy in the U.S. with construction spending ticking higher and better-than-expected pending home sales boosted inflation potential, a key driver of gold.

Inflation is likely to take off again once the economy turns a corner due to vast amounts of government-stimulus spending.

Gold traded in a range of USD902.00 to USD905.50 a troy ounce, after rallying nearly 2% Monday. Signs of a recovery in jewelry demand in India also helped.

Next key events for market direction are the U.S. bank stress tests Thursday and U.S. non-farm payroll data Friday.

Some market watchers have, by now, discounted the impact of the publication of the stress tests, with news already out that some of the 19 institutions tested will be required to raise more capital, but any surprises may still yield some follow-through buying or selling for gold.

"Gold is essentially still in a range, we've seen these USD5-USD10 bursts over the past few weeks. Volumes are generally low," said a Sydney-based trader. Japan's Tocom was closed Tuesday.

"But gold is slowly edging higher. If we can get above USD910/oz, there's scope to move higher," the trader said.

In a note, ScotiaMocatta said gold's technical outlook brightened after bounding from support at USD866/oz last week and breaching the USD900/oz level overnight.

Prices now need to get past resistance at USD918/oz for further upside momentum, Scotia said.

At 0656 GMT, spot gold traded at USD902.35/oz, down 85 cents on the New York close and silver was down 3 cents at USD13.00/oz. Platinum was down USD1.50 at USD1,116.50/oz and palladium was down USD2.50 at USD216.50/oz.

India gold futures little changed; INR to weigh

Singapore - India June MCX contract little changed at INR14,445/10 grams on lack of cues from overseas spot gold, which is trading nearly flat today. "The contract is likely to see some pressure from a strong rupee," says local analyst; tips contract in INR14,336-INR14,571/10 grams range. Domestic demand weak, but May imports likely on par with 30 tons imported last month as traders start stocking for festivals later in year, he adds.

Spot gold firm on weak USD, physical buying
London - Spot gold looks steady, and could push higher on dollar weakness and physical demand, says MKS Finance's head of trading and physical sales Afshin Nabavi. "There's still some light physical buying around and no scrap sales for the time being." Comments gold tested and held above USD900/oz overnight, making $900 a near-term support. Tips gold to hold near current levels and possibly test next resistance at USD909/oz. Spot gold at USD902.40/oz, +5 cents from 0000 GMT.