ETF Holdings Stay at Record as Gold Edges Down
Source: Reuters (5/11/10)
". . .right now gold is consolidating"
Although China's consumer inflation in April rose slightly more than expected to 2.8%, analysts said there were no signs the country would tighten the economy immediately. A move to tighten the economy could dent its appetite for commodities.
Spot gold XAU was at $1,201.40 an ounce, down 50 cents from New York's notional close on Monday, when it had dropped below $1,200 an ounce after a $1 trillion rescue designed to prevent a European debt crisis ignited selling.
"I think people don't really buy this rescue package. I think most of the countries' Congress have yet to approve it before they can release the fund," a bullion dealer in Hong Kong said.
"Sentiment for gold is still bullish. ETF holdings also rise every day," he added.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD), said its holdings stood at a record high of 1,192.150 tons as of May 10, from 1,188.498 tons in the previous business day.
Gold gained about 2.5% last week as investors ditched the euro on fears the euro zone debt crisis would spread beyond Greece. Bullion was about 2% below a lifetime high of $1,226.10 struck in December last year.
The euro slipped on Tuesday, giving back some gains made the previous day on news of the rescue package to prevent the spread of the European debt crisis, as skepticism remains over Greece's ability to cut its large fiscal deficit smoothly.
"Actually, right now gold is consolidating. Gold prices are quite stable on the high side," said Wong Eng Soon, an investment analyst at Phillip Futures in Singapore.