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Gold steadies after 2% rise

Gold barely moved on Friday, having risen more than 2% in previous session, as the euro weakened against the US dollar and equities markets extended losses on worries about a global recession.  

But gold could find support from jewelers as the wedding season progressed in main consumer India. Platinum hit a 3-week low on fears of falling demand for autocatalysts, which account for more than 60% of global use.

Gold was trading at $745.50 an ounce, up $0.40 an ounce from its notional close in New York on Thursday, when it hit an intraday high of $751.60 an ounce as physical buying helped it defy selling in equities.

Gold was below a lifetime high of $1,030.80 struck in March and was unable to revisit the level after recent rallies were met by selling. It hit a two-month high of $931 in October but losses in equities forced investors to cash in to cover losses.

“Given the relative strength of the dollar, it’s tending to put a cap on gold extending its gains,” said Darren Heathcote of Investec Australia in Sydney, adding that bullion would trade in current range of $725 to $750. The euro edged down to $1.2443 after falling in New York as investors sold risky assets such as stocks and commodities financed by loans denominated in the US dollar.

“I don’t really have anything much on gold because it’s still really on a sideward consolidation with no clear short-term trend. However if we do move above the $750-$760 regions, then this may change,” said a dealer in Singapore. “That however, will go against the negative correlation gold has with the dollar as the dollar continues to move higher also,” he said.

Japan’s Nikkei dropped more than 3% to a three-week low on a stronger yen and an overnight plunge in US stocks, which dealers said could still spur selling in gold. “New York stock markets fell sharply and that put pressure on gold,” said Kazuhito Saito of Interest Capital Management.

Platinum, was also under pressure after Japanese automakers Toyota Motor Corp and Nissan Motor Co said they would cut production due to falling demand, said Saito, adding that platinum futures in Tokyo would also extend losses. Platinum was trading at $763.00 an ounce, up $0.50 from New York’s notional close. It dropped to a 3-week low of $759.00 in early trade on Friday on recession worries. (Reuters)