Daily Gold Update

Source: Reuters

London— Encouraged by a pop above $275 in the last session after buying triggered stops, gold was eyeing another attempt to move higher in early European trade on Monday but still looked vulnerable to long liquidation, traders said.

Having once more settled back to the middle of its recent range around $273 an ounce.the range being $271 to $275.50 — dealers said gold.s failure to hold Friday.s move higher was now weighing heavily on sentiment.

.However, with the FOMC meeting tomorrow, and OTC option expiry on Wednesday, there could still be some pressure to keep it closer to the upper end of the recent range,. said one.

.It looks like some form of cut in rates has been discounted, at least 25 basis points, but with the U.S. economy still weak, could they go for another 50 basis points?.

The Federal Open Market Committee was due to meet on Tuesday with the results of the meeting to be released on Wednesday after the European market close.

Signs of rising inflation and the general deterioration of the global economy are factors supporting gold at the moment as they might prompt a flurry of bullion buying. Gold tends to be viewed more favourably as an inflation hedge when financial situations worsen and equities and securities markets suffer.

By 0950 GMT spot gold was at $273.10/$273.60, up from $272.30/$272.90 at the New York close on Friday.

Silver was still failing to impress after weeks of uninspired trading, and with no fundamental news on the horizon there was little reason for this to change.

Market players were cautiously holding out for a move higher on the back of any rise in gold, but by 1000 GMT spot silver was at $4.32/$4.34 from $4.30/$4.32 at the New York close.

.Support at $4.30 has held well and if there.s any short-covering we could see a rally,. said one trader.

The platinum group metals (PGMs) had drawn back from the limelight after their prices began to diverge last week, upsetting a trend for parity that had been in place since the start of the month.

.The PGMs are slightly softer on spot but demand should be seen around these levels,. said a trader.

With Hong Kong markets closed on Monday, the trade in PGMs overnight had been a bit thinner in Asia.

Spot platinum was last at $573.00/$578.00 from $572.00/$577.00 at Friday.s New York close, while palladium was at $606.00/$616.00 against $608.00/628.00.