Gold price up for third day on softer dollar; physical demand lags

Aug 28 2014, 10:02 IST
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SummaryGold price rose for the third straight day on Thursday on softening dollar...

Gold price rose for the third straight day on Thursday on softening dollar and increased tensions between Ukraine and Russia, but the precious metal was under pressure from rallies in equities and the prospect of a U.S. interest rate hike.

Higher interest rates would dull the appeal of non-interest-bearing assets such as gold, which was struggling to cross the key resistance of $1,300 an ounce. Gold prices were more than $600 below a record hit in 2011.

Gold added 0.24 percent to $1,285.56 an ounce by 0355 GMT, moving away from a two-month low of $1,273.06 hit on Aug. 21.

"As far as gold is concerned, the complex has more stacked against it then it has going for it, at least over the short-term," said INTL FCStone analyst Edward Meir.

"In this regard, investment and jewellery demand remains weak, although there are indications of a pickup in India," said Meir, referring to the world's second-largest consumer.

U.S. gold was $1,286.60 an ounce, up 0.25 percent, partly due to geopolitical tensions after Ukraine accused Russia of launching a new military incursion across its eastern border.

Although the recent fall in gold prices spurred some buying from the jewellery sector, physical dealers said the quantity was small and some investors also turned to equities.

"Demand from India, especially for silver, has picked up because of the upcoming festival season. Overall, demand has been good in the last two days, but things are quieter today," said a physical dealer in Singapore.

"I guess that's because gold doesn't move either way. It's not clear whether it will break $1,300, so people who need gold may have bought it. Those who want to sell are still waiting for the right price."

Premiums for gold bars in Singapore remained steady at 80 cents to $1 an ounce to spot London prices.

In other markets, Asian stocks crept up on Thursday following another steady performance by Wall Street shares which hovered near record highs, while the euro clung to modest gains after rebounding from 13-month lows.

"...global equity markets have

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