Singapore: Gold bounced on Wednesday from its weakest level since mid February. But signs of a recovery in the US economy and an absence of support from the physical sector could limit gains and keep prices in a tight range.
In a sign of tepid physical demand, premiums for gold bars in Asia were little changed at between 25 cents to $1 an ounce to the spot London prices this week. This was partly due to concerns that a weak yuan could hurt demand from main consumer China. Gold rose by 0.2 per cent, or $2.11 an ounce, to $1,312.55. It also to fell to $1,305.59 an ounce on Tuesday, its lowest since February 14, before recovering.
"There's some bargain hunting, but there's still sufficient supply and the premiums are not going up," said Brian Lan, Managing Director of GoldSilver Central Pte Ltd in Singapore. Gold has fallen from a six-month high of $1,391.76 hit early last week, after Janet Yellen, US Federal Reserve Chief, suggested that the interest rates could rise sooner than many had expected, denting bullion's appeal as a hedge against inflation.
US consumer confidence surged to a six-year high in March and house prices increased solidly in January, positioning the economy for stronger growth after a weather-induced soft spot. But the drop in gold prices failed to ignite a rush in physical buying, with dealers in Hong Kong complaining about a slowdown in demand from jewellers and retail investors from mainland China.
