Gold holds above $1 300

LONDON.- Gold held above the psychological $1 300 mark yesterday, supported by ongoing tensions over Iran and North Korea and recent weak US economic data. Palladium made another break above $1 000 an ounce to the highest levels since 2001 on the back of strong Chinese auto sales.

Spot gold was unchanged at $1 304.50 an ounce at 1355 GMT, while US gold futures for December delivery added 0,2 percent to $1,306.80 per ounce. Spot gold has been rebounding since touching a two-month low of $1 260,16 on October 6, lifted by worries about North Korea and a weak dollar.

While the dollar index edged up yesterday as the euro dipped, recent weak US economic data and tame inflation point to a more favourable environment for gold.

“Last Friday we had rather disappointing CPI number, which further enforced the view that there's no need for the Fed to be very aggressive in terms of rate hikes,” said analyst Carsten Menke at Julius Baer in Zurich.

Rising interest rates tend to boost the dollar and push bond yields up, putting pressure on the greenback-denominated, non-yielding gold.

“Now it seems that gold has some legs above $1,300 level, which attracts some technical buying.

“The bulls have the upper hand, at least for the moment. I wouldn't expect a sharp down move over the next couple of weeks.”

Geopolitical risks, including over Iran and North Korea, are likely to persist this week, Jeffrey Halley, a senior market analyst with OANDA, said in a note.

“This should all combine to ensure that gold maintains a safe-haven tone this week,” Halley said.

Palladium jumped to its highest since February 2001 at $1 010,50 an ounce, before paring gains to $1 000,90, up 1,3 percent. Some investors had been wary when the metal, mostly used for auto catalysts to clean pollution from exhaust fumes, broke above $1 000 on September 6, due to concern about weak global auto sales. — Reuters.