Gold resistance for Wednesday is 1658-1668
PRECIOUS-Gold recovers from 1-month low on G7 statement
Gold clawed back from its lowest in over a month on Tuesday, as the dollar fell following a statement from the Group of Seven industrialised countries reaffirming commitment to market-determined exchange rates.
However the market still struggled to regain positive territory as investors concentrated on a brighter global economic picture. Gold also failed to reprise its safe-haven role after North Korea confirmed it had conducted an underground nuclear test.
Gold hit a low of $1,638.82 an ounce early on Tuesday, its lowest since Jan. 4, later rallying to $1,648.41 an ounce by 1521 GMT, flat on the day. U.S. gold futures for April delivery also were also steady at $1,648.70 an ounce.
The dollar index, which rose in early trade to a one-month high against a basket of currencies, fell back after the G7 nations reiterated a commitment to market-determined exchange rates and said fiscal and monetary policies must not be directed at devaluing currencies.
"A combination of elements, including dollar weakness after the G7 statement, rebounding stock markets and stronger oil prices, helped gold's bounce back from one-month lows," Quantative Commodity Research consultant Peter Fertig said.
The G7 intervention followed a round of rhetoric about currency wars, prompted largely by Japan's new government pressing for an aggressive expansion of monetary policy, which has seen the yen weaken sharply.
"The next focus for the market is the G20 meeting on Friday and Saturday, where finance ministers can give more clues on currencies," Danske Bank analyst Christin Tuxen said.
PRESSURE
Technical selling pressure on gold started in the previous session after prices slid through a succession of key support levels and below $1,650, suggesting further liquidation is possible.
Investor sentiment towards gold is still seen declining in the short term, while volumes remain thin as most Asian players are on holiday this week, analysts said.
"The physical demand remains anaemic with China away on public holidays this week while the rupee weakened last week, deterring Indian buyers," VTB analyst Andrey Kryuchenkov said.
"At this point, bullion buyers in Asia would not want to get involved in an investor driven market when sentiment towards gold continues to sink."
Gold has underperformed other precious metals since the start of the year as signs of improved economic recovery have deterred investors, who have favoured riskier assets such as equities and more industrial metals such as platinum and palladium, analysts said.
"The ever increasing macro confidence has dented bullion's traditional safe-haven appeal, while alternative and more volatile assets, including PGMs, offer better returns away from gold," Kryuchenkov said.
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I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
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