Gold poised for third day of gains

Thursday, 20 January 2011 00:01 -     - {{hitsCtrl.values.hits}}

Singapore (Reuters): Spot gold was on course for a third consecutive day of gains on Wednesday, supported by dollar weakness and physical buying, while platinum hit a 30-month high, buoyed by an improved economic outlook.

The euro currency rose to a one-month high against the dollar on Tuesday, after strong data out of Germany, the euro zone’s leading economy, lifted the economic outlook for the region.

The dollar’s index against a basket of major currencies fell to a two-month low on Wednesday, as continued short-covering in the euro led to a broad fall in the dollar.

“It looks like gold is following the euro, which had a relatively strong run overnight,” said Darren Heathcote, head of trading at Investec Australia, adding that the dollar weakness was expected to continue supporting gold prices.

Active buying in Asia continued to buoy market sentiment, and gold is likely to trade in the range between $1,370 and $1,378 with a possibility of breaching the upside, he said.

Spot gold rose by half a percent to $1,374.30 an ounce by 0715 GMT, gearing for its third straight day of gains.

U.S. gold futures gained 0.4 percent to $1,374.2.

Spot gold is expected to end its current minor rebound by briefly touching a trendline resistance at $1,378 per ounce, as the major trend is still down, said Wang Tao, a Reuters market analyst.