Precious Gold steadies around $1,300; strikes support platinum, palladium

by **Cals** Fri 16 May 2014, 02:17

Precious Gold steadies around $1,300; strikes support platinum, palladium

Business & Markets 2014

Written by Reuters

Thursday, 15 May 2014 18:42

(15/05/14 18:34:17)

LONDON/SINGAPORE (May 15): Gold was little changed around $1,300 an ounce on Thursday, with support from lower European stocks offset by a firmer dollar after strong U.S. data signalled an improved outlook for the world's biggest economy.

Palladium and platinum eased slightly as investors took profits, but largely held gains from a three-day rally spurred by rising labour tensions in major producer South Africa.

Platinum hit a two-month high and palladium touched a 2-1/2 year peak on Wednesday.

Strength in the more industrial precious metals helped propel gold prices higher in the previous session.

"Gold's strength is capped by stronger dollar and better U.S. data," Societe Generale analyst Robin Bhar said.

"What is going on in platinum and palladium does have an impact on gold at certain times like this when there are no strong drivers."

Spot gold was down 0.1 percent at $1,303.54 by 1019 GMT, but held near the one-week high it reached in the previous session.

U.S. gold futures fell 0.1 percent to $1,304.10 an ounce.

In wider markets, the dollar rose 0.3 percent against a basket of main currencies, helped by unexpectedly higher U.S. producer price inflation data for April on Wednesday, the largest increase in 1-1/2 years.

European equities fell after data on the euro zone's gross domestic product growth for the first quarter came in below expectation.

The climb in gold prices has deterred physical buyers, with premiums in top buyer China falling to less than $1 an ounce over spot rates, compared with $2.50 in the previous session.

South African strikes

South Africa's longest and costliest strike ever has taken a violent turn in recent days, with four platinum miners killed as more employees try to report for work at the world's top producers, defying union orders.

South Africa's police minister on Wednesday vowed to crack down on violence against miners trying to return to work and arrest "within hours" strikers that he said were behind a campaign of intimidation.

"Whatever the ultimate outcome...the strike is entering a much more dangerous phase, since with some workers returning to work, there is now increased likelihood of violence and less chance of a negotiated settlement," said INTL FCStone analyst Edward Meir.

Platinum was down 0.1 percent at $1,473.20 an ounce after rising to $1,483.50 on Wednesday while palladium fell 0.5 percent to $820 an ounce but was still near its 2-1/2 year peak of $827.50 hit in the previous session.

HSBC analysts said a return to work by miners would be negative for platinum group metal prices in the near term, given the recent rally.

"However, we remain bullish in the medium to longer term," the analysts said.

South Africa is the world's top platinum producer and second-biggest palladium producer after Russia.

Spot silver fell 0.5 percent to $19.63 an ounce, retreating from a two-month high of $19.97 on Wednesday.