Gold Steady Under $1,360; Eyes China Inflation
Source: Reuters (2/14/11)
"The resignation of Egypt's president took some heat out of risk aversion."
Egypt's generals are asserting their command over the country following the overthrow of President Hosni Mubarak.
Having suspended the constitution and dissolved parliament on Sunday, the armed forces council was planning to issue orders intended to stifle further disruption and get the country back to work.
Gold prices, which have been buoyed by the turmoil in Egypt, may get a further boost if China's reports a high inflation number. Economists polled by Reuters have pegged China's January inflation rising at a 30-month high.
"China's inflation number is something to watch out for. If the number is high, it may cause another move up in gold prices, because people would use gold as hedge against inflation," said a Singapore-based dealer.
But a stronger-than-expected rise in inflation may trigger fears of more tightening, after China raised interest rates twice in just over six weeks.
Spot gold was little changed at $1,357.25 an ounce by 0335 GMT. U.S. gold futures edged down 0.2% at $1,357.80.
A bullish target for spot gold of $1,388 per ounce has been aborted as it failed to touch a new high on Friday, making likely a further drop towards $1,333, said Wang Tao, a Reuters market analyst.
Physical market activity was subdued, as Chinese buyers had yet to jump in to the market as expected.
"We are not seeing much physical interest after the Chinese returned from the Lunar New Year holiday, and the premiums in Shanghai are lower than before the holiday," said Peter Fung, head of dealing department at Wing Fung Precious Metals in Hong Kong.