GOLD edged higher during much of yesterday’s trading, a fragile indication that last month’s price slide to the lowest in more than two years may have run its course for now.
The yellow metal ended slightly down, yet was up for much of the day and appears resilient to further drops, having bounced back in recent weeks.
“Technically we are in a nice upward channel since the mid April low,” Saxo Bank’s Ole Hansen said. “So far corrections have been pretty shallow.”
Outflows from bullion-backed exchange-traded products (ETP), which hit records in recent months, have also slowed, he said. The world’s largest gold-backed ETP, New York’s SPDR Gold Trust, reported an outflow of 3.6 tonnes on Friday, against an average 6.6 tonnes in April.
Hedge funds and money managers increased their bullish bets in gold futures and options in the week to 30 April as the price of the precious metal rallied 4.5 per cent during the period, a report by the CFTC showed on Friday.
A surge in physical buying in Asia and other parts of the world lifted gold prices from April’s low of $1,321.35 an ounce, leading to a shortage of gold bars, coins and nuggets in Hong Kong, Singapore and Tokyo.
“Physical demand is... likely to remain firm until the price recovers sufficiently to limit further purchases to more normal levels,” NAB said in a note. “We expect gold’s final resting place at the end of 2013 to be around $1,470 an ounce.”