Monday, May 11, 2009

>Asia spot gold steady, weak dollar helps

Sydney - Spot gold prices were steady in Asia Monday, reacting to a weaker dollar, but overall activity was quiet, traders and analysts said.

At 0656 GMT, gold traded at $915.75 a troy ounce, down 45 cents on the New York close.

Better-than-expected U.S. non-farm payroll data Friday boosted equity markets and pared some of gold's gains, but prices held up relatively well.

While waning risk aversion on the back of signs of the U.S. economy bottoming out should clip gold, it appears to have a stronger impact on the dollar, which in turn is helping gold, said Phillip Futures Analyst Adrian Koh.

"I think the argument that concerns for rising inflation are also driving gold is premature. The market is still focused on the economy, and excess liquidity isn't going to hit for another two years down the road," Koh said.

Kitco Analyst Jon Nadler said inflation risk continues to be "practically nil at the moment. One does not come out of a deflation of this size by immediately flipping over into a highly inflationary environment. Here, and now, at best, we might have an absence of deflation."

Gold prices have shown "impressive resilience" in the past few weeks given lack of exchange traded fund buying and a rangebound dollar, Deutsche Bank said in a note.

Gold's outlook would depend on direction for the dollar. "We have argued for some time that we believe risks are more skewed to U.S. dollar weakness, which may be triggered by a relapse in global equity markets," Deutsche Bank said.

Gold holding in the SPDR Gold Trust ETF, listed in New York, were again unchanged at 1,104.09 metric tons, and moved only marginally since April 23.

At 0652 GMT, spot silver was down 2 cents at $13.97/oz. Platinum was down $5.50 at $1,141.50/oz and palladium was unchanged at $239.00/oz.

On Tocom, April 2010 gold futures were down Y13 at Y2,916 a gram, while platinum was down Y52 at Y3,633/gram.

Gold still a dollar play - Deutsche Bank

Singapore - Gold prices have shown "impressive resilience" in past few weeks given lack of ETF buying, rangebound USD, says Deutsche Bank. Adds outlook depends on direction of USD going forward, tips dollar to break its recent range in near term; "we have argued for some time that we believe risks are more skewed to U.S. dollar weakness, which may be triggered by a relapse in global equity markets." Sticks to its forecast that gold to average $914 in 2009. Notes any more signs that central banks or sovereign wealth funds diversifying into gold would also be potential positive catalyst. Spot gold at $914.55/oz, down $1.65 since Friday's NY close.

India gold futures likely weak on strong INR

Singapore - India June gold contract likely to open down pressured by strong INR, weak trend in overseas spot gold, says Tejas Seth, analyst at SMC Global Securities; tips contract in INR14,360-INR14,620/10 grams band for day. Increasing optimism of recovery in global economy is leading to decline in safe-heaven buying for gold, he adds. Contract last ended down 0.2% at INR14,506.