London: Gold firmed on Wednesday as some investors bought back into bullion-backed funds, but uncertainly ahead of US jobs data and a lack of Asian demand during the Lunar New Year break kept the metal in its tightest range in six weeks.
Concerns about the fragility of stock markets after a recent heavy sell-off has piqued some investment interest in gold, with the world’s largest bullion-backed exchange-traded fund, the SPDR Gold Trust, reporting a 3.9-tonne inflow on Tuesday.
Spot gold was up 0.3 per cent at $1,257.80 an ounce at 1029 GMT, while US gold futures for February delivery were up $6.50 an ounce at $1,257.70. Spot prices held in a range of less than $7, their narrowest since Christmas Day.
Investors are likely to stick to the sidelines ahead of US non-farm payrolls data for January on Friday, widely seen as a barometer for the health of the world’s largest economy.
Ahead of that, they will be watching Wednesday’s ADP reading on private hiring due at 1315 GMT. Any disappointment will be taken badly by stock market investors, analysts said, but could benefit gold.
“The market is sitting tight ahead of the US jobs report on Friday and today’s ADP’s private sector employment survey,” Andrey Kryuchenkov, an analyst at VTB Capital, said. “Physical buyers are absent owning to holidays in China, and there’s a bit of a seasonal lull, while investors remain sceptical.” European stocks inched up in early trade, snapping their steepest two-week pull-back in seven months, but underlying worries about global growth and emerging market currencies kept buyers on edge.
Fragile confidence among investors lifted the yen on Wednesday as buyers sought safe-haven currencies, while the dollar was flat against a basket of major currencies, offering little direction to gold.
Physical demand was expected to remain weak as number one buyer China stayed closed for the Lunar New Year holiday. Other parts of Asia were also subdued due to the gain in prices and weakness in regional currencies.
“With the Chinese not back until Friday it’s hard to imagine much action again in Asia tomorrow,” MKS said in a note.
Silver was up 0.9 per cent at $19.62 an ounce, while spot platinum was up 0.6 per cent at $1,379.24 an ounce and spot palladium was up 1.3 percent at $707.50 an ounce.
Palladium’s rebound comes after eleven straight days of decline, its longest run of daily losses since Reuters data began in 1984.
Both platinum group metals have come under heavy selling pressure since negotiations to end a wave of strikes in major producer South Africa resumed this week.
“We believe the floor in platinum is $1300 — which is not that far away, but we doubt prices will get close to that level,” UBS said in a note on Wednesday. “Given the degree of selling that has already besieged platinum over the past week, positioning is now much cleaner and so we expect limited longevity to the current mood.”