Gold, Aided By Weakened Greenback, Climbs Above $1,520

Gold, no longer ignoring the greenback, poked its nose above $1,520 early this morning after being pushed down by the rising currency last evening. Slumping below $1,515 as the U.S. dollar rose, it turned around and settled into a range between that level and $1,518 for the rest of the night. It climbed above the range starting at 3 AM ET, and managed to get as high as $1,524.70 before losing its momentum and slumping back to the $1,520 level. Both silver and WTI crude oil advanced in the same timeframe too, the latter reaching $99. As of 8:14, the spot price of gold was $1,521.50 for a gain of $4.30 on the day. The Kitco Gold Index split the gain into +$0.80 for predominant buying and +$3.50 to a weakening greenback.

The U.S. Dollar Index, after sailing up to a peak of 76.36 at 8 PM, choppily slipped and scrambled for an uneven but overall decline. Not stopping until it troughed at below 75.85, it managed to halt its slippage at 7 AM and move into a range. As of 8:20, it was travelling sideways at 75.96.

A Bloomberg report said gold gained on safe-haven buying prompted by Euroland-related worries. Gold made a new record high in Euro terms as Fitch downgraded the Belgian government's debt and the Grecian government approved more asset sales as part of a new aid-garnering austerity package.

“Concerns over the ability of euro-zone peripheral nations to contain their debt continue to intensify,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. “We expect further dip-buying to underpin gold.”

Standard & Poor’s GSCI Index of 24 commodities is rebounding too.

An earlier Reuters report gave the same reasons.

"The market is so unsure as to what the outcome of all the various meetings that are going on in Europe, whether or not they are going to come to an agreement for restructure or some other kind of means of dealing with it," said Darren Heathcote, head of trading at Investec Australia.

"We've yet to find out."

Holdings of the SPDR Gold Shares Trust rose yesterday by 7.58 tonnes to 1,209.53 tonnes, building on Friday's larger gain of 10.61 tonnes. Those gains make for a snapback from a one-year low.

A Wall Street Journal report said gold crept upwards because of the weaker greenback and Euroland-related worries.

As long as jitters over sovereign debt in the euro zone remain, gold should continue to benefit as a perceived hedge against insecurity, market players said.

"We would keep an eye on gold's ratios against other precious metals, as bullion could well start breaking away from the rest of the commodity complex with tensions building up over peripheral debt troubles in the euro zone," said VTB analyst Andrey Kryuchenkov.

Still, there's some caution abut gold's fate becuase the Fed is ending QE2 and may turn hawkish later this year.

With regular trading up and rolling, gold stayed just above $1,520 with a brief dip below at 8:30; essentially, it moved sideways just before and after the start of the pit session. As of 8:40, the spot price was $1,520.10 for a gain of $2.90 on the day. The Kitco Gold Index attributed the entire gain to greenback weakening. The U.S. Dollar Index continued moving sideways just below 76.05. As of 8:42, it was coming off 76.0 at 75.98.

Gold did manage to successfully test $1,520 this overnight session, and so far is barely holding above that level. It may sink below today, despite staying above for several hours, because $1,520 is a resistance level and the metal's in consolidation mode. If the greenback resumes its downtrend, the metal will clear that resistance level and continue inching up. It managed to make a new record high in Euros, showing that it still has a fair bit of strength.