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Comex PRECIOUS METALS: Spot Gold Lower but Steady
Oct 10, 2012 By Laura Clarke

Spot gold is a touch lower in Europe and while analysts don't expect dramatic downswings for the well-supported yellow metal, platinum prices have fallen as mining labor tensions in South Africa continue to concern investors.

At 1052 GMT, spot gold was 0.1% lower at $1,762.56 a troy ounce.

Gold prices have been downbeat in recent sessions as investors have looked to wider markets and currency moves for direction.

Downgraded global growth forecasts this week have weighed on the wider markets, while continued uncertainty in the euro zone over Greece and Spain's debt crisis in particular have pressured the region's common currency lower, sending the euro to trade at $1.286 against the greenback Wednesday. This relative dollar strength weakens precious metal prices as it makes the complex less appealing to other currency holders.

"The debt crisis in the euro zone remains a dominant theme. The crisis-ridden countries have been reluctant so far to seek help as they fear the austerity conditions that this would necessitate and further protests from their populations," said analysts at Commerzbank.

However, much greater interest in gold exchange-traded fund products displayed in recent weeks is supporting prices.

"[This] is attributable above all to the ultra-loose monetary policy of central banks, which is fueling fears of reduced purchasing power as a result of inflation and currency devaluation," said Commerzbank analysts, adding that this reduces the chance of "any prolonged downswing."

Analysts expect there is enough underlying support to keep prices in a tight range for now, and gains made on the back of September's central bank easing announcements are unlikely to be fully reversed.

"We think we will see an element of stability set in over the precious metals complex over the next day or two, as the complex has been down for three days in a row now and is due for a bounce," said Ed Meir of INTL FCStone, adding that the yellow metal is no longer as overbought as it was last week, further making the case for a mild rebound.

Looking ahead, market participants are expected to continue to track wider markets and political developments in the euro zone in particular for direction amid nervous positioning.

Elsewhere, platinum was lower by around $20 on the day, as persistent tensions in key producing nation South Africa continued to worry investors.

More than 2,000 workers were fired Tuesday from a platinum mine run jointly by Atlatsa Resources Corp. and Anglo American Platinum Ltd. That followed Anglo American's firing on Friday of 12,000 employees for failing to appear at a disciplinary hearing stemming from a strike they had launched.

Also Tuesday, South Africa's three top gold-mining companies met with unions to try to resolve strikes that have crippled their operations.

At 1156 GMT, spot silver was 0.4% lower at $33.77/oz, platinum was down 1.3% at $1,662.20/oz, while palladium was 0.6% higher at $648.90/oz.

Write to Laura Clarke at [e-mail]

(END) Dow Jones Newswires

10-10-12 0716ET

Copyright (c) 2012 Dow Jones & Company, Inc.

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