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BW Businessworld

Gold Buyers Hesitant On Europe Concern

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Light selling triggered by a price rise in the previous session slowed down on Friday but current prices failed to attract much buying interest as investors believe the worrying situation in Europe leaves gold on shaky ground.

Gold bar premiums in Hong Kong and Singapore were steady from last week, as market participants wait for progress in the euro zone's struggle with a possible Greek exit from the bloc and a weakening economy.

"People just wanted to sell and book some profit," said a Singapore-based dealer, "No one has much confidence in the global economy, let alone in gold prices right now."

Premiums in Singapore were quoted at about $1 an ounce over London prices. In Hong Kong, premiums were quoted in a range of $1.20-$1.70, dealers said.

"The price trend is unclear. We saw buying from Shanghai yesterday and selling today, but people are worried that the euro is still under pressure and gold may have more downside risk," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.

Spot gold traded at $1,557.69 an ounce, up from a one-week low near $1,530 hit earlier this week but flirting with a technical bear market as the price fell 19 percent from the record above $1,920 last September.

Traders said $1,520 should provide firm support, but $1,600 has proved to be a key resistance level.

The rupee traded near a record low versus the dollar, making gold expensive for domestic buyers, just as the wedding season comes to an end. Gold demand will likely stay weak during the coming monsoon season and pick up in September.

In Tokyo, physical gold supply tightened after the recent price decline dented interest in scrap selling, while industrial demand and buying from investors were on the rise, dealers said.

Premiums in Tokyo rose to as high as $1.50 an ounce, the loftiest level in more than a year.

Week Ahead
Investors will closely watch Greece and the euro zone and their battle against the debt crisis. Prices could remain in range-trade unless decisive news came out of Europe ahead of Greece's elections in mid-June.


(Reuters)