Gold eases after rally - Emirates24|7

Gold eases after rally

(AFP)

Gold eased on Friday after rising above $950 (Dh3,496) an ounce again the previous day, but holdings at the world's largest gold-backed fund rose almost 4 per cent to a record, reflecting mounting demand for safe-haven investment.

World stock markets and the dollar gained ground from the previous day's sell-off, after sources familiar with the plan told Reuters the Obama administration was hammering out a programme to subsidise mortgages.

Spot gold was trading at $939.60 an ounce, down 0.6 per cent from New York's notional close on Thursday, but on track for a rise of roughly 3 per cent on the week.

Bullion hit a peak of $953.30 on Wednesday, its highest since July 2008, and rose as high as $951.80 on Thursday.

Benchmark gold futures for April delivery eased to $944.1 an ounce after rising above $950 an ounce to as high as $954, the highest since July 23, late on Thursday.

But market participants remained mostly bullish, given uncertainty over prospects for the global economy. A glut of money supplied by central banks and governments to prop up economies also helps make gold shine.

"Thanks to low interest rates around the globe, the demerit of holding precious metals has disappeared," said Yuki Sonoda, adviser to the president at Daiichi Commodities Co.

"Investors keep fleeing towards a safe haven. Helped by a consistent inflow of long-term funds, gold is set to reach the $1,000 level sooner rather than later," Sonoda said, referring to a boom in exchange-traded funds backed by gold.

Gold could rally above its previous all-time high to as much as $1,500 an ounce if it manages to close the week above $892 an ounce, technical analysts at Barclays Capital say.

Exchange-traded funds which issue securities backed by physical stocks of bullion as well as silver have seen interest soar as long-term investors seek out equities and other conventional assets.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said on Friday its holdings hit a record 970.57 tonnes as of February 12, up 35.48 tonnes or 3.8 per cent from the previous day.

The holdings were up more than 20 per cent this year.

 

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