PRECIOUS METALS: Spot Gold Tad Higher In Range Trade

27th Jul 2010 09:50

By Matthew Walls Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Spot gold is slightly higher in Europe Tuesday in narrow range trade, as light physical demand is offsetting falling investor interest. An improvement in sentiment across financial markets has taken some luster from gold, with holdings in gold exchange-traded funds still on the decline. If gold retreats to test support, physical buyers may step aside and leave gold without a floor, analysts said. At 0836 GMT, spot gold was 0.23% higher at $1,186.52 a troy ounce. The EUR/USD was at $1.3006, up from $1.2986 at 0000 GMT. "It seems people are moving a bit out of gold," said Jeremy East, global head of commodities trading at Standard Chartered in London. "Financial meltdown and all the rest of it seems to be disappearing." U.S. consumer confidence is the big data release of the day, and could reinforce confidence in the U.S. economic recovery following Monday's better-than-expected new home sales figures. That should damp demand for gold and possibly lead to further long liquidation. UBS analyst Edel Tully said gold ETF holdings in July are having their worst month since February. Holdings in gold ETFs are up just 219,000 ounces, well below the average monthly inflows of 2.44 million ounces for March to June, Tully said in a report Tuesday. The falloff puts pressure on jewelry demand to make up the slack, and it may not emerge until prices are significantly lower. East said physical buyers usually buy when prices dip the first time, as they did last week when prices fell to $1,175.61/oz. But on second dips, they usually wait for gold to find a new level, he added. In other metals, spot silver was 0.3% higher at $18.17/oz. Spot platinum was up 0.3% at $1,552.70/oz and spot palladium was up 1% at $473.65/oz. -By Matthew Walls, Dow Jones Newswires; +44 (0)20 7842 9412; [email protected] (END) Dow Jones Newswires July 27, 2010 04:50 ET (08:50 GMT)