Gold regains strength, physical buyers scarce
Gold regained strength on Friday after easing in the previous session, but a drop in ETF holdings to their lowest since late January, a firm US dollar and a lacklustre physical market could cap its gains.
Premiums for gold bars were steady in Hong Kong and Singapore, with no signs of buying interest from China after the Lunar New Year celebration. Unrest in Egypt could underpin sentiment, but there was hardly any physical buying in Asia related to the deadly turmoil.
Egypt's people-power protesters, reeling with disillusion and anger after President Hosni Mubarak dashed hopes he would resign, planned massive new demonstrations on Friday that may test the army's loyalties.
"There's not much going on in terms of demand in the physical market. That's why there are some stocks kept here. (People) try to sell them immediately," said Dick Poon, manager of precious metals at Heraus in Hong Kong, referring to physical supply.
"The production side and manufacturing are not back to normal after the Chinese holiday. Maybe next week. I think gold is most likely to trade in the range of $1 350 to $1 370 right now."
Spot gold added 79c to $1 363,69/oz by 0349 GMT, well below a lifetime high around $1 430/oz hit in December. Trading was thin, with Japanese investors away for a public holiday, but the price had reached an intraday high around $1 365.
A bullish target of $1 388/oz has been re-established for spot gold based on an inverted head-and-shoulders pattern, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1 225,526 t by February 10, their lowest since late January, from 1 226,436 t on February 9.
US gold futures for April rose $1,6/oz to $1 364,1/oz.
The US dollar drifted higher on Friday, having made solid gains as renewed jitters about the euro zone debt crisis weighed on the common currency. US data showing new applications for unemployment benefits dropped to a 2-½ year low last week also helped shore up the greenback.
Gold was at around $1 340/oz before the Lunar New Year.
"There's not much demand from India either. The price is either too high for them to buy or to low to cash in. I think they are doing business internally, and there's no need to buy from overseas market," said a dealer in Singapore.
"The premium for gold bar is still at $1,6, but it's likely to drop next week. We are starting to see suppliers easing up their premiums."
In other markets, Asian stocks fell on Friday and were on course for their biggest weekly loss in nine months, as investors shunned risk on concerns about the pace of policy tightening within the region and escalating tensions in Egypt.
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