Gold remained volatile on Friday as investors sought to book profits after a 10-day high hit in early trade,but the metal was still poised for its loftiest weekly gain in more than a year,reversing last weeks slide.
After hitting its highest since April 15 at $1,484.81 an ounce earlier this session,spot gold pared down gains and was trading down by 0.3% at $1,461.84 by 0945 GMT on Friday. It was heading for a 4% gain for the week,having risen 2.5% on Thursday,its biggest daily rally since June last year. US June gold futures were trading at $1,461.60 an ounce.
The precious metal had hit a two-year low of $1,321.35 last week,but it has now managed to rebound about 75% on robust physical buying in Asia,mainly India and China. Analysts said physical demand for the precious metal may fall next week as China,the world’s second-largest gold consumer,will be on holiday for three days for the May Day break.
Premiums for gold bars in Hong Kong jumped hit $3 an ounce last week their highest since October 2011 to spot London prices,and those in Singapore also scaled their peak since October 2008 at $3 an ounce to spot London prices on robust purchases in India,Indonesiaa and Thailand.
However,outflows from gold exchage-traded funds continued unabated,suggesting that investor confidence on the safe haven asset is still shaky. Holdings of the largest gold-backed exchange-traded fund,the SPDR Gold Trust,dropped 0.25% to 1,090.27 tonne on Thursday from 1,092.98 on Wednesday,according to Reuters. Currently,holdings are at their lowest level since September 2009.
“Heavy disinvestment from ETF investors is being offset by strong physical demand in key markets such as India and China,but neither of these is likely to continue indefinitely,and which runs its course first could determine whether the (gold) price moves $100/oz higher or lower,” Macquarie said in a note.
Silver,too dropped 1.2% to $24.04 an ounce in intrady trade on Friday,but it was still heading for the highest weekly gain since January. The gold/silver ratio remained high on Friday with an ounce of gold currently fetching around 60 ounces of silver,compared to less than 32 ounces in April 2011.
In Delhi,gold remained stable on Friday on restricted buying. Standard gold was selling at R27,800 per 10 grams while pure gold price was ruling at R28,000.