Gold regains lost ground as bargain hunting supports
SINGAPORE: Spot gold regained lost ground on Monday, as bargain hunting trickled in after prices dropped about one percent in early trade in response to China's interest rate increase on Saturday.
Spot gold fell to a oneweek low of $1,371.10, before recovering to $1,384.80 an ounce up 55 cents from the previous close.
U.S. gold futures pulled back from a 0.4-percent decline to $1,386.2, up 0.4 percent.
"Earlier speculators were selling on China's rate hike news, but a lot of buying has since emerged as speculators are buying on dip," said a Tokyo-based dealer.
Spot gold is technically neutral as it is rangebound between $1,360 and $1,392 per ounce, but the bias seems to be with the bulls, Reuters market analyst Wang Tao said.
Spot silver fell as much as 1.6 percent to a one-week low of $28.75 an ounce, and recovered to $29.24 an ounce, up 0.1 percent.
Spot platinum gained 0.7 percent to $1,734.50 an ounce, and palladium rose by one percent to $760.97, both reversing early losses.
China's central bank raised interest rates on Saturday for the second time in just over two months as it stepped up its battle to rein in stubbornly high inflation.
"The market had been worried about more tightening moves from China. Now that the news is out, it almost came as a relief," said Li Ning, an analyst at Shanghai CIFCO Futures.
Commodity markets pared early losses after the initial selling-off, focusing instead on positive fundamentals and threats to supply.
Robust physical demand in the region was seen supporting the sentiment in the precious metals market.
"Some speculators liquidated their positions earlier, but we also see very good physical demand in the market today," said Peter Fung, head of dealing department at Wing Fung Precious Metals in Hong Kong. -PB News