Gold Edges Up But With No Conviction

Gold is asleep in the Asian session holding at 1284.50 after climbing a few dollars on Tuesday. Strong U.S. economic data and expectations of more stimulus from the European Central Bank dragged on the metal as they boosted the appeal of the U.S. dollar and equities. Gold was steady at $1,282.20 having jumped about 1 percent on Tuesday on chart-based buying before paring gains. Prices hit a two-month low of $1,273.06 on Aug. 21 on speculation of an eventual increase in U.S. interest rates. Silver is trading at 19.460 flat this morning while platinum added $2.50 to trade at 1420.90.

Speculation is growing that the European Central Bank is preparing a programme of large-scale asset purchases to weaken the euro and try to jump-start growth in the struggling euro zone. “Gold is helped by some safe-haven demand but U.S. economic data continues to show good growth, and we expect the strong dollar and momentum in stocks to put pressure on prices,” said Huang Wei, a Shanghai-based analyst at Huatai Great Wall Futures Co. “Outflows from the SPDR also shows a slight negative trend.”

A ceasefire agreement between Israel and the Palestinians aimed at ending their seven-week conflict in Gaza went into effect on Tuesday and joyous Palestinians streamed into the streets of the battered enclave to celebrate.

Investors were increasing gold positions as a safe-haven, as tensions flared on the border between Ukraine and Russia Russian President Vladimir Putin began talks today with his Ukrainian counterpart, Petro Poroshenko. Ukraine said that 12 servicemen and 200 rebels died in the past 24 hours.

“The market is still very cautious. The physical side is not as good as in the previous month and even last year,” said Brian Lan, managing director of retailer Gold Silver. “What we are seeing is a lot of speculative trading by the bigger players and hedge funds. Gold is still within the trading band,” said Lan, adding that short-term technical support for the metal was at $1,275 while resistance was still $1,300.

The US dollar held just under a 13-month peak against a basket of major currencies early on Wednesday, with the euro still struggling amid expectations of further policy easing from the European Central Bank.

Copper is trading at 3.203 easing down 9 points after a disappointing new home sales report eased down prices.  Copper prices slipped on Tuesday, after a closely watched U.S. home-price index missed expectations, amid broader concerns about demand. The metal for September delivery, the most actively traded contract, fell 3.2 cents, or 1%, in price to $3.1860 a pound on the Comex division of the New York Mercantile Exchange. Volume was less than 25,000 contracts, or about 15% of recent averages. The market opened weaker and moved lower this morning.