* Physical gold demand sluggish; buyers eye price dip
* Spot gold may retrace to $1,757/oz – technicals
* Coming up: ECB President Mario Draghi speaks, 0730 GMT
(Adds comments, details; updates prices)
By Rujun Shen
SINGAPORE, Oct 9 (Reuters) – Gold inched up on Tuesday after
two days of decline, but persistent worries about the euro zone
debt crisis and global growth could weigh on bullion, as these
concerns keep the dollar strong.
Speculative interest in gold remained strong, as stimulus
measures launched by key central banks in September drive
investors to gold, a hedge against inflation and currency
debasement caused by looser monetary policy.
Holdings in the gold-backed exchange-traded funds rose to a
historic high of 74.73 million ounces by Oct. 7, up 6 percent
over the past two months during which gold prices climbed nearly
10 percent.
But higher prices have kept a lid on physical demand in the
region, especially as a global slowdown has started to impact
the economies in the key gold consumers in the region, including
China and India.
“The jewellery sector has been badly affected, as people are
reluctant to spend,” said a Singapore-based trader. “The lack of
physical demand is worrying.”
The recent price rally has triggered a wave of scrap selling
in Southeast Asia. In major consumer India, festival season
demand may fall short of last year, he added.
Many buyers, however, are waiting on the sidelines for the
next price dip, as price outlook remains bullish for gold.
“People will quickly come back to the market when prices
drop $30 to $50, and we’ll see gold breaking above $1,800 by the
end of the year after a healthy correction,” the Singapore-based
trader said.
Spot gold edged up 0.2 percent to $1,778.09 an ounce
by 0313 GMT, rebounding from a one-week low of $1,766.14 hit on
Monday. Gold fell almost 1 percent over the last two sessions,
its sharpest two-day decline since August.
U.S. gold crawled up 0.3 percent to $1,780.40.
Technical analysis suggested that spot gold is biased to
retrace to $1,757 an ounce during the day, said Reuters market
analyst Wang Tao.
EURO ZONE IN FOCUS
The deepening crisis in Spain and Greece kept investors on
their toes, lifting the dollar index from a two-week low
as the greenback’s safe haven allure attracts investors during
economic distress.
Equities, oil and base metals strengthened, but gains were
capped by concerns over global growth prospects, after the World
Bank cut is economic growth forecasts for the East Asia and
Pacific region.
“Things have looked better for gold after the Federal
Reserve launched a new round of quantitative easing, but right
now we seem to be in a consolidation mode,” said Dick Poon,
manager of precious metals in Hong Kong.
Poon said physical demand was lacklustre, and the premium
for gold bar in Hong Kong was about 50 cents above London
prices.
Precious metals prices 0313 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1778.09 3.80 +0.21 13.70
Spot Silver 34.14 0.18 +0.53 23.29
Spot Platinum 1696.50 9.70 +0.58 21.79
Spot Palladium 658.90 4.80 +0.73 0.98
COMEX GOLD DEC2 1780.40 4.70 +0.26 13.63 7777
COMEX SILVER DEC2 34.20 0.18 +0.54 22.51 2129
Euro/Dollar 1.2978
Dollar/Yen 78.36
COMEX gold and silver contracts show the most active months
(Editing by Miral Fahmy)
