PRECIOUS-Gold gains from softer dollar, geopolitics

Mon Mar 21, 2011 3:38pm GMT
 

 * Safe-haven bid helps gold but investors wary
 * Palladium spec holdings drop sharply
 
 (Adds comment, refreshes prices)
 By Amanda Cooper
 LONDON, March 21 (Reuters) - Gold rose for a fourth day on
Monday, drawing strength from a softer dollar and from its
appeal as a safe haven while Western powers carry out air
strikes on Libya and Japan struggles to avert nuclear disaster.
 The dollar rose against the yen for a second day but fell
against a basket of major currencies to its lowest in 15 months,
under pressure from the view that U.S. interest rates would not
rise any time soon.
 The gold price, which is set for its tenth consecutive
quarterly gain, was last up 1.0 percent at $1,433.50 an ounce by
1510 GMT, while most-active U.S. April futures were up 1.1
percent at $1,431.40.
 Gold has re-established its traditional negative link to the
dollar since the Japanese earthquake struck ten days ago, which
triggered widespread selling across financial markets.
 "You can't deny the escalating Middle East problems and the
oil price are all supportive factors, but I wonder whether the
big jump (in the gold price) is more weaker dollar-related,"
said Credit Agricole analyst Robin Bhar.
 "It's all contributing to the safe-haven bid, and this week
is going to be important ... geopolitical risk factors are
uppermost in people's minds."
 Engineers at the Fukushima nuclear plant managed to restore
some power to start a water pump at one of the facility's six
reactors to reverse the overheating that has triggered the
world's worst nuclear crisis in 25 years, while the death toll
from the earthquake was estimated to be above 20,000.
 Unsettling investors further was a second wave of
U.N.-authorised air strikes against Libya's Muammar Gaddafi,
which a government spokesman called "barbaric" and Russian Prime
Minister Vladimir Putin said resembled "medieval calls for
crusades".
 "It's happening against a backdrop of elevated uncertainty
from numerous places, which should give these safe-haven type
commodities a bid," said Saxo Bank senior manager Ole Hansen.
 Gold usually benefits from periods of heightened risk
aversion, but since the Japanese earthquake, the price has
fallen by more than 3 percent.
 "As long as we have this tendency towards risk aversion in
the market, gold will be struggling. It's such a high percentage
of the total investment in commodities, so if there is anything
to be reduced, gold is often in the firing line in that
respect," Hansen added.
 Oil prices rose by more than $2 a barrel after the strikes
on Libya aggravated concerns about supply from the region, also
helping to buoy the price of gold, which is used as a hedge
against inflation.
 Reflecting the pick-up late last week in investor appetite
for gold, holdings of the metal in the world's largest
bullion-backed exchange traded funds, the SPDR Gold Trust, rose
to their highest in 5-1/2 weeks.
 Holdings of gold in the six major ETFs tracked by Reuters
are set for a rise by over half a million ounces this month,
although in the quarter so far, holdings have fallen by 2.13
million ounces.
 Spot silver climbed 2.9 percent to $36.07 an ounce, making
it the top gainer in the precious metals complex. Silver prices
are on track for a ninth successive quarterly gain, up by 16.1
percent in the first three months of the year.
 Spot palladium was last up 1.6 percent at $740.72 an ounce,
but is set for a near-8 percent decline this quarter, having
come under pressure from investors concerned about the impact of
the Japanese earthquake and soaring energy prices on the broader
economy.
 Data from the Commodity Futures Trading Commission last week
showed the largest weekly decline in speculative holdings of
palladium since at least 1995, bringing the net non-commercial
futures position to 1.12 million ounces, its lowest since
October 2009.
 Spot platinum was last up 1.4 percent at $1,740.75.
 (Additional reporting by Rujun Shen in Singapore; editing by
Jane Baird)

Market Update

  • Africa
  • US
  • Europe
  • Asia
UK £ USD =1.6580
Euro USD =1.3175
Rand USD =0.0941