Gold Dips from 2-Week High as Euro Pauses
Source: Reuters, Chikako Mogi (4/2/10)
"An economic recovery is not necessarily a bullish factor for gold."
As the global economic recovery becomes more evident, gold may come under pressure, with investors turning to other commodities that traditionally gain on strengthening industrial demand such as platinum and palladium, traders said.
"Gold will be seen as an underperformer when the economic outlook brightens, with investors showing more interest in other commodities that benefit from rising industrial demand," said Wakako Harada, a senior trader at Mitsubishi Corp in Tokyo.
"An economic recovery is not necessarily a bullish factor for gold, which may succumb to selling pressure after its bull run," she said.
Spot gold was confined to a narrow $5 range, trading at $1,120.00 per ounce as of 0513 GMT, down 0.5% from New York's notional close of $1.125.50 per ounce. At this level, spot gold is set for a 1% weekly gain.
Bullion ended the first quarter nearly 2% higher on currency volatility related to euro zone debt and firm stock markets, but it has struggled to sustain gains since hitting a record above $1,200 an ounce in December.
U.S. gold futures for June delivery settled at $1,126.10 an ounce on Thursday on the COMEX division of NYMEX.
Spot gold rose to $1,127.75 an ounce on Thursday, its highest since March 17, while platinum group metals rallied to their highest in more than 20 months as fresh investment money poured into commodities and other asset classes across the board.