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Gold Eases After Recent Gains, Struggles To Stay Above $1,400
By A. Ananthalakshmi
27/08/2013
SINGAPORE (Reuters) - Gold struggled to stay above the key $1,400 an ounce level and slipped on Tuesday as traders took profits after a recent price rally, though it remained near 11-week highs on hopes of U.S. monetary stimulus measures being prolonged.
Gold rose to $1,406.04, its highest since June 7 in early Asian trading, but failed to find enough support to stay at those levels. Weak U.S. durable goods data had pushed gold past $1,400 on Monday.
"It's quite risky to build on any fresh positions from here so people are just taking profits," said one Hong Kong-based trader.
"If we cannot hold and stay above $1,400 by the end of the week, it's a very bearish situation for gold technically."
Spot gold dropped 0.4 percent to $1,398.21 an ounce by 0422 GMT, while silver slipped 0.7 percent.
Gold has gained nearly 6 percent this month and almost 20 percent from its year-low of $1,180.71 hit in late June.
Recent U.S. data on industrial production, new home sales and durable goods orders have suggested economic growth this quarter will probably not accelerate as much as economists had hoped.
Traders believe the weak data could delay the Federal Reserve from tapering its stimulus that economists had largely expected to start from next month. The Fed's $85-billion-a-month bond purchases have helped drive increased liquidity towards gold and other commodities.
PHYSICAL DEMAND WEAK
Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices.
India is considering asking gold traders to produce proof of payment for their jewellery exports, trade body officials said on Monday, a move which may further tighten supplies in the world's top bullion buyer.
Imports have come to standstill since July 22 when the Indian central bank issued a rule tying imports to exports, in an effort to reduce its trade deficit.
Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's above $20 levels.
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