Gold outlook seen as positive as metal price hovers in $880s
The gold price was steady above $880 on Thursday as investors watched stock markets to gauge investors’ risk appetite, with trade slowing ahead of the Easter holiday weekend.Investors are looking for opportunities to sell gold and buy other assets such as stocks, though gold remains supported on dip buying because of persistent concerns about the health of the global economy and financial system. Traders also said fears of inflation are helping support bullion."I still think we are seeing a bit of a shift from the safer investments back into equities, etc, at the moment, I think that’s basically the reason why we dipped under $900," an analyst in Australia said.Gold was at $882.45 per ounce at 0628 GMT, up 0.3 percent from New York’s notional close of $879.55.Bullion is now trading more than 10 percent below the 11-month high above $1,000 marked in February, after sinking below $900 earlier this month.Asian stocks outside Japan and Tokyo’s Nikkei both rose more than 3 percent on Thursday after the Japanese government unveiled a bigger-than-expected stimulus package of $154 billion, equivalent to 3.1 percent of GDP.Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, said the outlook on the economy also appeared better after the G20 summit and some economic data, which was also denting precious metal demand. "There’s less panic, everything seems to be stabilising a bit more," Leung said.Traders said gold was unlikely to move much ahead of the Easter holiday weekend.Gold fell on Wednesday after the Federal Reserve released minutes of its last policy-setting meeting depicting more economic gloom but little worry about inflation.Traders said however, inflation worries were likely to be a factor to lift gold to $1,000 or above in the long term, as they seek the metal, traditionally seen as a hedge against inflation."In six or 12 months’ time, I still think gold will be around $1,000, even higher," the analyst said.Traders said gold’s strength could be seen in the fact that holdings of exchange-traded funds remain near record highs.The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said its holdings stood at 1,127.37 tonnes as of April 8, unchanged from April 3 when they fell from a record 1,127.44 tonnes.For details of the holdings of the ETF listed in New York and co-listed on other exchanges.Prospects for inflation and weakness in the dollar were also cited by JPMorgan as it raised its gold price outlook for 2009 and 2010. It lifted its 2009 price view for gold to $960 an ounce from $831 previously. A day earlier, metals consultancy GFMS increased its price projections to $1,100 for 2009.