Gold futures steady, spot trades higher

Gold futures in New York steadied above $430 an ounce on Wednesday morning, boosted by speculative and options-related buying, but prices kept within a broad overall range, traders said.

Gold for August delivery climbed $1.30 to $430.60 an ounce by 10:09 a.m. EDT on the New York Mercantile Exchange's Comex division, moving between $428 and $430.90.

"We're still seeing some two-way flow, but there seems to be a bullish overtone to the metals," said Andy Brosoff, vice president of precious metals at Mitsubishi International Corp.

"There is some more call buying in the marketplace and the dollar's losing a little ground, giving gold some support," he said.

But gold's roughly $420-$440 range remains intact, he added, and the market would be curious to see if central bank selling would resume if prices managed to get back above $440. The dollar hit a nine-month high against the euro before paring its gains, as markets focused on the strengthening interest rate advantage held by the United States over the euro zone.

The euro was near $1.2099 at midmorning, after earlier touching a low at $1.2018. "The dollar rally has yet to manifest in a breakdown in dollar-priced gold," Greg Weldon, an independent analyst and publisher of the Metal Monitor report, said.

That was because gold was making its most aggressive effort to date to break away from all paper currencies and rise against them all, with buoyant commodity prices in energy and industrial metals "holding up" gold, Weldon said.

In the local markets, the price of standard gold (.995 purity) moved up from Rs 6,085 per 10 gm to Rs 6,090, and the price of gold (.999 purity) remained unchanged at Rs 6,120. Silver on the other hand increased to Rs 10,905 per kg, from Rs 10,885.

In the futures trading, the August contract on the Multi Commodity Exchange (MCX) saw prices rise from Rs 6,127 yesterday to today's close of Rs 6,129 with an open interest of 3,781 kg and a volume of 390 kg.

During the same period silver July contract on MCX saw the price close at Rs 10,721 per kg from Rs 10,728 with an open interest of 307,260 kg and a volume of 52,860 kg.

On the National Commodities and Derivatives Exchange of India (NCDEX) the price moved from Rs 6,126 yesterday to Rs 6,125 today, with an open interest of 510,800 gm and 36,100 gm volume. Silver moved from Rs 10,739 to Rs 10,742 during the same period.

Meanwhile, gold prices moved higher in Europe on Wednesday, with renewed fund interest pushing currencies and US data into the background, traders said.

"Fund interest has returned to the precious metals market today following yesterday's rather dull day," James Moore of TheBullionDesk.com said.

"With the funds back on the bid, gold has continued to detach itself from the euro/dollar correlation, showing it is still a viable investment product," he said.

Spot gold increased to $428.20/428.90 a troy ounce by 1441 GMT, compared with late levels in New York on Tuesday of $426.75/427.50.

Inflation fears eased as a plunge in energy costs pulled US consumer prices down by 0.1 per cent in May.

Although gold seemsd to have relaxed its previously tight link with the euro, traders said any fall by the single currency through $1.20 might destabilise gold.

"The dollar/euro is threatening key support pegged between 1.20 and 1.18 with a break targeting 1.15 then 1.10, a scenario that would undermine gold's recent advance," Standard Bank London said in a daily report.

Gold prices denominated in other currencies also calmed down after scoring new highs two days ago. Investors, disheartened by political instability in Europe and economic concerns in the United States, have turned to gold in recent days.

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Safe haven

• The price of standard gold (.995 purity) moved up from Rs 6,085 per 10 gm to Rs 6,090, and the price of gold (.999 purity) remained unchanged at Rs 6,120
• Silver on the other hand increased to Rs 10,905 per kg, from Rs 10,885
• In Europe, spot gold increased to $428.20/428.90 a troy ounce from $426.75/427.50 on Tuesday