Gold Creeps Up On Thin Trade, Waits on Payroll Numbers

October 2, 2012 at 07:45


Gold inched up on Tuesday, crawling back towards an 11-month high hit in the previous session, supported by a slightly weaker dollar and investor hopes for further central bank action to battle the grim outlook for global economic growth.

Spot gold marked an 11-month peak of $1,791.20 on Monday as an unexpected expansion in U.S. factory activity and more clarity on Spain’s bailout plan sent some relief through the market, knocking the dollar index DXY from a three-week high.

A weaker greenback makes dollar-priced gold more attractive to buyers holding other currencies.

Analysts said that more central banks may follow the lead of the European Central Bank, the U.S. Federal Reserve and the Bank of Japan in adopting further stimulus measures to spur economic growth, benefiting gold, a good hedge against rampant cash printing.

The immediate focus is on a rate decision by Australia’s central bank later in the day. A poll found that the Reserve Bank of Australia is likely to keep interest rates steady for a fourth month, although some see a real chance of a quarter-point cut.

“Gold will remain well supported by QE (quantitative easing by the Fed) and the euro zone debt crisis,” said Lynette Tan, an analyst at Phillip Futures in Singapore, adding that the Spain bailout plan and a key U.S. employment report would continue to dominate gold moves in the short term.

Technical analysis suggests that spot gold’s ascent could face resistance at $1,785 during the day, said market analyst Wang Tao.

Trade was thin in Asian hours, as markets in China, Hong Kong and India are closed for public holidays. China will be still be shut for the rest of the week.

Holdings of gold-backed exchange-traded funds posted a small gain to 73.978 million ounces by September 30, inching towards a record high of 74.288 million ounces hit last week.

The labor dispute in top platinum producer South Africa continues. Top global platinum producer Anglo American Platinum said on Monday it would fire all strikers who did not attend disciplinary hearings the following day as an illegal strike continued at four of its South African mines.

Spot platinum was little changed at $1,670, after posting five sessions of straight gains.

Elsewhere, September’s U.S. non-farm payrolls data due Friday is expected to show an increase of 113,000, from a 96,000 rise in August.