Gold prices hover above $1,600, recovery hopes offset bargain buys
Confidence in economic recovery sent the S&P 500 index and Dow Jones industrial average to their highest in more than five years. S&P 500 has climbed more than 7 percent so far this year, compared with a 4-percent loss in cash gold.
The latest piece of good news on global economy was that German business sentiment soared to its highest level in nearly three years this month, enhancing optimism that the worst of the euro zone debt crisis is over.
"The inverse correlation between gold and equities has become very pronounced, as investors gravitate towards high-yielding and riskier assets," said Li Ning, an analyst at Shanghai CIFCO Futures.
Investors will be focusing on the wording in the minutes of the US Federal Reserve's latest policy meeting due later in the day to gauge the central bank's attitude towards its monetary policy, which has helped gold's rally in recent years.
"Unless the Fed expresses a very pessimistic view on the economic outlook, gold is unlikely to react with a strong rally," Li added.
Holdings of SPDR Gold Trust, the world's top gold-backed exchange-traded fund, dropped more than 3 tonnes from the previous session to 1,319.964 tonnes on Feb. 19, the lowest level in nearly five months.
Anglo American Platinum expects operations at its South African mines to resume on Wednesday after workers staged a one-day walk-out following union violence at one of its mines, a spokeswoman said.
Be the first to comment.