Gold Prices Steady on Technical Rebound


"There has been solid buying on dips in anticipation of renewed price appreciation in 2010."

Gold prices steadied off a 6-1/2-week low in a technical rebound on Tuesday, but the dollar's firmness limited the metal's gains amid light trading.

Gold prices were confined to a range of less than $10 in Asian trade as many players stuck to the sidelines ahead of the holidays and after liquidating long positions on the dollar's strength over the past few days.

Analysts said gold could test lows in the near term after breaking $1,100 as investors close positions before the end of the year, but their appetite to buy bullion on dips would support the market.

Gold is now trading nearly 11% below record highs hit earlier in the month.

"Gold broke the key resistance level of $1,100 yesterday on the strong dollar. Rising dollar and strong recovery next year would cap the upside gain in gold coming into year 2010," Phillip Futures said in a report on Tuesday.

"On the other hand, potential inflationary threats might come from crude oil as the economy picks up and this could keep the gold price supported," it said.

U.S. gold futures for February delivery GCG0 were little changed at $1,095.70 per ounce, compared to $1,096.00 on the COMEX division of the New York Mercantile Exchange. Futures fell $15.50 on Monday from the previous day.

There has been solid buying on dips in anticipation of renewed price appreciation in 2010, underscoring extended gains in the holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD).

SPDR Gold Trust (GLD) said its holdings rose by 6.097 tonnes or 0.5% to 1,132.708 tons on Monday. They hit a record high of 1,134.03 tons on June 1. [GOL/SPDR] India's spot gold prices rose on Monday as buying gained momentum in the market after a correction in prices in the previous week, dealers said.

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