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BookmarkSINGAPORE (Dow Jones)–Gold edged higher in Asia Thursday, trading at its highest level since early December, as speculative buying and physical demand held firm.
Spot gold was trading at $1,745.50 a troy ounce at 0540 GMT, up $2.50 from its previous settlement and up around 12% since the start of the year.
A trader in Singapore said Asian speculative demand is returning to gold following a selloff in December, with investor flows signalling further gains in the next few weeks.
“Some of the investment community have come back into gold recently,” he said, tipping support at $1,680/oz and then at $1,650/oz. Gold is unlikely to drop below $1,500/oz this year, he said.
“Gold might look overextended, but then it seems it can always extend some more,” he said, noting that Chinese market participants have been buying dips since the start of the year.
Gold traded as high as $1,752.41/oz Thursday but pared its gains as the euro gave up some ground against the U.S. dollar. The euro was trading around $1.3163 compared with $1.3161 late in New York Wednesday. When the greenback firms, dollar-priced commodities become more expensive to investors holding other currencies.
Market participants said movements in the dollar and macroeconomic indicators from the U.S. and the euro zone will drive gold prices in the next few weeks.
The market may also soon turn its attention to U.S. non-farm payrolls data, which is due for release Friday. A worse-than-expected reading could boost demand for gold as a safe haven, while an upbeat reading could pressure gold if risk appetite improves.
Other precious metal prices were lower Thursday, with silver slipping 11 cents to trade at 33.60/oz. Traders said silver is coming under pressure from profit-taking following its 20% rally in January.
Platinum dropped $2 to $1,615/oz, while palladium fell $4.60 to trade at 691.40/oz.
Mitsui Global Precious Metals said in a note that it expects palladium to rise in the next few weeks as demand for platinum group metals improves.
“Palladium looks set to tackle $700 a troy ounce again, and (in the) medium term, we expect (prices to be) higher,” it said. Palladium last traded above $700/oz in September 2011.
