[miningmx.com] — GOLD prices inched down in thin trade on Thursday as investors remained sceptical of the euro zone’s ability to tackle its debt crisis after the European Central Bank’s latest moves to keep credit flowing in the
region.
Banks gobbled up nearly €490bn in three-year cut-price loans from the ECB, easing immediate fears of a credit crunch, but investors doubted if such measures could help solve the debt crisis, leaving equities and the euro under pressure
and pushing up Italian and Spanish bond yields.
News from the euro zone will continue to dominate the mood in financial markets.
Later in the day, Italian Prime Minister Mario Monti will face a confidence vote on approving an austerity package.
“We will probably be trapped in the range of $1,575 and $1,650 until the year-end,” said a Hong Kong-based dealer, “The market is still focused on the euro zone – if there will be new agreement, if the euro zone economy will slide next year, etc.”
Spot gold edged down 0.4% to $1,609.19 an ounce by 0334, off a one-week high of $1,641.50 hit in the previous session.
US gold inched down 0.1% to $1,611.80.
Technical analysis suggested that spot gold could fall to $1,596 during the day, as a rebound from the Dec. 15 low of $1,560.36 has been completed, said Reuters market analyst Wang Tao.
Trading volumes were thin ahead of holidays, as many traders have closed books for the year. Even the start of a new year in less then two weeks is unlikely to instantly rekindle enthusiasm due to the tightened liquidity.
“If we don’t see any change on the policy front, the tight liquidity will extend into the new year,” said Hou Xinqiang, analyst at Jinrui Futures in China.
But Hou said the anticipation of easing monetary policy in the world’s major economies – the United States, China and Europe among others – later in the year would buoy commodities, including gold.
SPDR Gold Trust, the world’s biggest gold-backed exchange-traded fund, said its holdings fell 12.1 tonnes from the previous day to 1,267.878 tonnes, the lowest since early November.
The ETF has lost 30.656 tonnes in holdings so far this month, but its holdings were still on course for a monthly gain of more than 35 tonnes, just as cash gold prices were headed for their first quarterly decline in more than three years.
