Gold eased on Thursday after rising to its strongest in a week in the previous session, as strong demand for Portugal’s bond sale eased concern over the debt crisis in Europe.
Investors awaited debt auctions by Spain and Italy later in the day and the release of US jobless claims after a recent pick up in US economic data prompted some economists to beef up growth forecasts for the first half of 2011.
Spot gold fell $1,02 to $1 386,20 an ounce after rising as high as $1 388,90 on Wednesday as the US dollar dropped against the euro.
“The safe-haven demand for gold may recede temporarily. I would think that gains in gold for the day ahead may be difficult to sustain,” said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
“I would think that $1 400 would pose some resistance for gold, at least for the time being.”
Gold was off a lifetime high around $1 430 struck in early December, when fears the debt crisis in Europe would spread ignited buying from investors.
But Wang Tao, a Reuters market analyst for commodities and energy technicals, said gold was poised to rebound more to $1 407 per ounce, as indicated by an inverted head-and-shoulders pattern.
In the physical market, dealers noted purchases from main consumer India as well as China, which could offer support for cash gold. Premiums for gold bars were at two-year highs in Singapore and Hong Kong.
“There are talks the Indian government is looking to increase tax on gold imports, so locals are looking to stock up before hand. They are moving into coins and gold bars,” said a dealer in Singapore.
“Local demand from China is firm before the Lunar New Year and buying interest from Turkey is also strong.”
Bullion traders in India are expecting an import duty increase on precious metals in the February budget.
US gold futures for February hardly moved, at $1 385,5 an ounce.
The euro slipped from one-week highs on Thursday after short-covering triggered by Portugal’s successful debt auction the previous day ran its course and traders looked to debt sales by Spain and Italy.