Gold inches up on Asia demand, firm dollar caps gains
Gold dropped by a steep 3 percent last week – biggest such drop in nine months – and Chinese traders rushed to pick up bargains when they resumed business this week, sending volumes on Shanghai Gold Exchange to record highs on Monday. But the frenzy can be short-lived, traders cautioned.
"We have seen very good physical demand from Southeast Asia and China," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank.
But the strong interest from Asia did not translate into a quick rebound in prices, as enthusiasm from investors outside the region has cooled due to an improving global economic outlook that dims gold's safe-haven appeal.
"Asians are buying, but it is offset by the selling from funds in the Western market," Ikemizu added.
Speculators cut their net long positions in U.S. gold to 70,250 contracts in the week to Feb. 12, the lowest level since December 2008, down more than 30 percent from the end of 2012, data from the U.S. Commodity Futures Trading Commission shows.
Spot gold rose 0.3 percent to $1,614.56 an ounce by 0254 GMT, off a six-month low of $1,598.04 hit late last week. U.S. gold had also gained 0.3 percent, to $1,614.50.
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