SINGAPORE — Gold inched down yesterday after optimism about Spain’s bank bailout quickly gave way to renewed worries about the eurozone debt crisis ahead of a string of key events later this month.
The rally in risk assets on Monday fizzled, as investors sounded the alarm on the bailout’s impact on public debt, while worries about Greece’s future in the eurozone heightened in the run-up to elections there.
Investors remained wary of taking big new positions as they waited for the Greek vote on June 17, as well as a Group of 20 meeting and the US Federal Reserve’s policy meeting next week.
“There are mostly small short-term range players around, and nothing long term,” said a Singapore-based trader.
Spot gold inched down 0,1% to $1 592,79 an ounce by 0350GMT.
US gold futures for August delivery lost 0,2% to $1 594.
Gold buyers have pinned hope on more Fed stimulus, which would help the metal attract investors who are concerned about the threat of higher inflation.
Recent data showed that the US recovery might be slowing down, but Fed chairman Ben Bernanke last week gave few hints on imminent easing at a congressional testimony.
Atlanta Federal Reserve president Dennis Lockhart said on Monday he was not convinced that current economic circumstances call for additional monetary easing “quite yet”.
Holdings of the gold-backed exchange-traded funds rose to 70,06 million ounces by June 11, the highest level since the beginning of May, suggesting rising investor interest in gold.
“Given gold ETP (exchange-traded product) holdings have been broadly resilient and speculative positioning is relatively light, gold has an opportunity to re-establish its ‘safe haven’ status,” said Barclays Capital in a research note.
“Particularly as concerns over sovereign debt, flat currency, counter-party risk and the desire to hold a hard asset have supported gold in the past.”