Gold was higher in choppy and highly liquid trade on Wednesday afternoon amid a firmer euro. At 2.46pm, gold was quoted at $544,20 a troy ounce, up $1/oz from its previous close.
“It has been quite a choppy and volatile day. We’ve seen extremely high levels of liquidity,” a Johannesburg-based trader said.
The trader said gold was following the euro and that sentiment remained bullish. The euro was last at $1,2077, up from $1,2057 at the previous close.
Another trader noted that dollar weakness had crept in earlier and had pushed the spot price of gold higher. Gold moved through the technical level of $550/oz earlier this week, but has since retreated, leaving the market undecided which direction to take next.
“Maybe we now need to touch lower levels before we try to go back to $550/oz. First we need to go to around $525/oz to $530/oz, and this is possible within the next few days,” the second trader continued.
Gold was last trading below $530/oz last Friday, before fund-buying helped it surge to a long-term high of $551,80/oz on Monday.
“Gold has started 2006 in a positive manner and we suspect that this strength will continue in the near term,” investment bank UBS said in a report.
“Our traders believe that $550/oz is an important level, with lots of exotic option strikes around that level. Now that $550 has traded we are wary of potential profit-taking, although we believe that the metal will soon resume its climb higher,” UBS added.
At 2.46pm, platinum was changing hands at $1 010/oz — down $1/oz from its previous close. It has ranged between a low of $1 008/oz and a high if $1 014/oz so far this session.
Palladium was last changing hands at $269,50/oz — down $4,50/oz from its New York close on Tuesday. — I-Net Bridge