Gold steady; eyes Iran, French bond sales

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SINGAPORE — Gold traded steady yesterday, near a 2½-week high hit in the previous session, as investors awaited a French bond auction later in the day to gauge the scope of the eurozone debt crisis and watched developments on Iran.

Gold rose with oil in the previous session, breaking its lockstep with the euro, after the European Union reached a preliminary agreement to ban imports of Iranian oil.

An escalation of tensions could drive investors to seek safety in bullion, even though in the past few months gold has largely moved in tandem with riskier assets after recent market turmoil tarnished its safe haven appeal.

“If we don’t have any shock out of Iran or any surprise on data, gold is likely to stay in consolidation with a near-term bottom at $1 550,” said Hou Xinqiang, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.

Analysts said the 200-day moving average, at $1 630, will be a key technical resistance for gold, and a move near that level could inspire selling. Spot gold edged up 0,4% to $1 616,80 an ounce, after hitting $1 618,06 in the previous session — its highest since December 21. US gold gained 0,3% to $1 618,20.

Technical analysis suggested spot gold could end the rebound below $1 629 an ounce, said Reuters market analyst Wang Tao.

Worries about the eurozone debt crisis linger, with markets eyeing a French bond sales later in the day after Germany’s bond auction on Wednesday fared better than November.

In contrast to the gloomy outlook on the eurozone economy reinforced by latest private sector data, US data continued to show signs of solid growth in the fourth quarter.

Investors will be watching the ADP National Employment report later today, a precursor to the key non-farm payroll data tomorrow, to seek evidence of improvement in the labour market.

Physical dealers in Hong Kong reported purchases from funds, albeit in small volumes, and supply is likely to improve next week as refineries resume operations after the new year break.

“Funds had no intention to buy gold when prices dipped below $1 530 at the end of the year, and now they are back in the market,” said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.

Exchange-traded funds, however, have yet to see investment interest picking up. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged at 1 254,57 tonnes for the seventh session.