Gold Rises in Asia; Likely Supported on Safe-Haven Demand
posted on
Sep 28, 2012 10:45AM
Recent Drill Results Include 24 Meters of 2.66g/t Gold in Open Pit Area
Gold extended overnight gains in Asia Friday on the back of safe-haven buying and rising inflation worries, which are expected to combine to provide support for the precious metal.
Spot gold was at $1,781.20 a troy ounce at 0531 GMT, up $3.90 from its previous close.
Though concerns in the broader market cooled after Spain presented an austere 2013 budget announced Thursday, investors are cautiously eying the results of a Spanish banking review scheduled to be announced later in the global trading day.
Either way, the direction for gold appears to be up.
"It is a combination of safe-haven buying and more liquidity coming into the market," IG Markets strategist Stan Shamu said.
If the Spanish banking review outcome hurts broader market sentiment, risk-off investors may flock to gold as a safe store of value. Meanwhile, concern about rising inflation that would accompany additional stimulus could prompt gold demand for the same reason.
"Longer term, we expect to see bullion continue to push higher, supported by central bank buying, QE[quantitative easing]-driven speculative investment and worries in Asia about inflation," ANZ said.
The metal has gained 5.3% since the start of the month, when central banks, including the U.S. Federal Reserve, announced more monetary stimulus through bond-buying.
Dollar weakness also boosted demand, as dollar-denominated commodities appear more affordable to holders of other currencies when the greenback softens.
The WSJ Index, which measures the dollar against a basket of currencies, was at 69.372 compared with 69.47 late Thursday in New York.
Spot silver $34.73/oz, up 7 cents from its previous close. It has gained 9.6% so far this month.
Spot platinum was at $1,661/oz, up $15, while palladium was at $635.30/oz, up $2.30.
Write to Arpan Mukherjee at [email protected]
Source: http://online.wsj.com/article/BT-CO-20120928-701263.html