Gold steadies above $1,748 after Greek debt deal

Last Updated: Tue, Nov 27, 2012 04:14 hrs

Gold traded in a tight range above $1,748 an ounce on Tuesday, as traders moved to the sidelines after initially pushing up bullion by almost $3 following a deal among Greece's international lenders to cut the country's long-term debt.

Euro zone finance ministers and the International Monetary Fund clinched agreement on reducing Greece's debt on Monday in a breakthrough to release urgently needed loans to keep the near-bankrupt economy afloat.

The euro rose to its highest level in nearly a month earlier in the day, before erasing much of the rise, while the dollar edged lower against a basket of currencies, supporting sentiment in dollar-priced commodities.

"There is a lot of apathy towards the Europe situation right now," said a Hong Kong-based trader, adding that many investors have chosen to sit on the sidelines as the month-end approaches, and some of them are closing books for the year.

But expectations for continuous monetary easing from central banks around the world boost sentiment in gold, he said.

"The big picture is still driving people to precious metals, because they think the current problem is either not addressed, or won't be realistically solved other than by the current tactic, which is to have central banks and finance ministries working together to stimulate economies," he added.

Spot gold traded nearly flat at $1,749.25 an ounce by 0322 GMT, after climbing to $1,751.40 earlier in the session. U.S. gold was also little changed, at $1,749.50.

Technical analysis suggested that signals will be neutral so long as spot gold remains in a range of $1,746-$1,755 an ounce, said Reuters market analyst Wang Tao.


Investors are also eyeing the expiry of COMEX gold December option later in the day. The strike levels at $1,750 and $1,800 have attracted high open interest.

The open interest on call options at $1,800 level exceeded 32,461 contracts, while the put option open interest stood at just over 4,400 lots. At $1,750 level, open interest on calls were at 8,191 contracts and on puts 7,773 contracts, Reuters data showed.

Hedge funds and money managers raised their bullish bets on U.S. gold futures and options to a four-week high of 148,630 lots in the week ended November 20, said the U.S. Commodity Futures Trading Commission.

Activities in Asia's physical gold market remained slow after a small bout of scrap selling on Monday, dealers said.

"The market is in comatose," said a Singapore-based dealer, "People are waiting for higher prices to sell scrap."

Spot silver rose to $34.26, its highest since October 11, before easing to $34.16.

Net length in U.S. silver rose the a one-month high of 33,317 contracts, the CFTC said.

More from Sify: