* Gold gives up early gains, EU summit eyed
* Coming up: U.S. existing home sales for Sept at 1400 GMT
By Lewa Pardomuan
SINGAPORE, Oct 19 (Reuters) – Gold gave up early gains on
Friday as shares in Asia slipped following a three-day rally and
as investors took a breather ahead of the outcome of a summit on
solving the euro zone debt crisis, which could support the euro.
Recent stimulus measures by central banks boosted gold’s
appeal as a hedge against inflation and sent prices to an
11-month peak of $1,795.69 an ounce in early October, but a
rebound in the dollar and uncertainty in Europe later trimmed
gains.
Gold hit an intraday high around $1,743 an ounce
before slipping to $1,737.65, down $3.44, as it headed for its
second weekly fall. The metal struck a lifetime high around
$1,920 in September last year.
“There’s some disappointment after (gold) could not pass
through $1,754 to $1,755. And then a stronger dollar dragged
down the market,” said Ronald Leung, director of Lee Cheong Gold
Dealers in Hong Kong, adding that dealers were also waiting for
the outcome of the euro zone summit.
“I think gold just follows the U.S. dollar. At $1,700, it
seems quite a number of people want to buy at this level.”
Bullion has closely followed moves in currencies, with
improving sentiment around the euro zone giving support to the
euro and weighing on the greenback. That makes dollar-priced
commodities more attractive for buyers holding other currencies.
“More time is required to build a new short-term bottom. We
expect this to happen towards the middle of next week,” Credit
Suisse said in a report.
“In the meantime, a brief retest of the short-term support
at $1,730/$1,732 is possible. The next short-term key support is
at $1,708/$1,712.”
U.S. gold for December delivery fell $5.90 to
$1,738.80.
European Union leaders took a big stride towards
establishing a single banking supervisor for the euro zone,
striking a deal under which the bloc’s rescue fund could start
recapitalising ailing banks next year, a French government
source said.
Creating an effective banking union, towards which this deal
was a first step, is regarded by the International Monetary Fund
and market economists as a key tactic in overcoming the euro
zone’s three-year-old debt crisis.
In other markets, the MSCI index of Asia-Pacific shares
outside Japan eased 0.3 percent after rising 1
percent for a seven-month high on Thursday.
The euro hovered below a one-month peak against the dollar
on Friday having been left unmoved by the European summit, while
the yen wobbled near a two-month low against the dollar as
speculation mounted over the possibility that the Bank of Japan
would take fresh stimulus measures.
The physical gold market was subdued on Friday, with
premiums unchanged at between 50 and 90 cents to the spot London
prices in Hong Kong and dealers waiting for India to resume
buying.
“Gold could see a seasonal up-tick in demand from India
going into the festival season, but it is likely to be more
subdued than previous years unless the Indian rupee
appreciates,” ANZ said in a report.
The festival season is underway in India, the world’s
largest gold consumer, and will peak with Diwali and Dhanteras
next month. Weddings also take place during this period.
Gold jewellery is an essential part of the dowry Indian
parents give to their daughters at weddings.
Precious metals prices 0616 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1737.65 -3.44 -0.20 11.12
Spot Silver 32.69 -0.08 -0.24 18.06
Spot Platinum 1637.99 -1.01 -0.06 17.59
Spot Palladium 637.72 -1.28 -0.20 -2.27
COMEX GOLD DEC2 1738.80 -5.90 -0.34 10.98 13180
COMEX SILVER DEC2 32.73 -0.14 -0.42 17.25 3292
Euro/Dollar 1.3061
Dollar/Yen 79.31
