SINGAPORE: Spot gold prices edged higher on Tuesday, building on a rally of more than 2 percent in the previous session, as optimism on resolving euro zone's debt crisis lifted mood in commodities and equities.
The pledge by Germany and France on Sunday spurred risk appetite, which helped stage the biggest one-day rise in nearly two weeks in U.S. gold futures.
"As the news revived risk appetite, some money was being moved out of the money market to commodities, including gold," said Hou Xinqiang, an analyst at Jinrui Futures in China.
"In addition, the outlook for stronger physical gold demand is likely to buoy sentiment in bullion."
Premiums for gold bars in Hong Kong stood around $3 an ounce to spot prices, their highest level since at least February, and the premium in Tokyo held at 50 cents, dealers said.
"We see the bottom for gold prices at $1,600," said a dealer at a large Tokyo-based bullion house, "when gold prices approach that level, physical demand from emerging economies rise".
Spot gold rose to $1,684.36 an ounce earlier in the day, its highest in more than two weeks. It stood at $1,679.29 by 0256 GMT, up 0.3 percent from the previous close.
US gold gained 0.7 percent to $1,681.60. Technical analysis suggested that spot gold is likely to test a resistance at $1,677 during the day, said Reuters market analyst Wang Tao.
EURO ZONE IN FOCUS
The debt saga in euro zone will remain in focus, traders and analysts said.
The European Union on Monday postponed a summit by a week to allow time for a broader solution to Greece's debt crisis, after Athens said it had concluded talks with international lenders on an aid payment needed to avert default.
"The tug of war remains until the politicians wake up," said a Singapore-based trader, adding that gold is likely to be rangebound between $1,630 and $1,720.
Asian shares rose and the euro held the previous session's big gains.
Societe Generale said it remains broadly bullish on the outlook for gold despite the recent retrenchment in prices, but lowered its 2012 average price forecast to $2,175 from $2,275.
Other precious metals also rose. Spot platinum rose nearly 1 percent to $1,531, extending the 1.8 percent climb in the previous session.
ROHIT KALIA
PGDM 3RD SEM
The pledge by Germany and France on Sunday spurred risk appetite, which helped stage the biggest one-day rise in nearly two weeks in U.S. gold futures.
"As the news revived risk appetite, some money was being moved out of the money market to commodities, including gold," said Hou Xinqiang, an analyst at Jinrui Futures in China.
"In addition, the outlook for stronger physical gold demand is likely to buoy sentiment in bullion."
Premiums for gold bars in Hong Kong stood around $3 an ounce to spot prices, their highest level since at least February, and the premium in Tokyo held at 50 cents, dealers said.
"We see the bottom for gold prices at $1,600," said a dealer at a large Tokyo-based bullion house, "when gold prices approach that level, physical demand from emerging economies rise".
Spot gold rose to $1,684.36 an ounce earlier in the day, its highest in more than two weeks. It stood at $1,679.29 by 0256 GMT, up 0.3 percent from the previous close.
US gold gained 0.7 percent to $1,681.60. Technical analysis suggested that spot gold is likely to test a resistance at $1,677 during the day, said Reuters market analyst Wang Tao.
EURO ZONE IN FOCUS
The debt saga in euro zone will remain in focus, traders and analysts said.
The European Union on Monday postponed a summit by a week to allow time for a broader solution to Greece's debt crisis, after Athens said it had concluded talks with international lenders on an aid payment needed to avert default.
"The tug of war remains until the politicians wake up," said a Singapore-based trader, adding that gold is likely to be rangebound between $1,630 and $1,720.
Asian shares rose and the euro held the previous session's big gains.
Societe Generale said it remains broadly bullish on the outlook for gold despite the recent retrenchment in prices, but lowered its 2012 average price forecast to $2,175 from $2,275.
Other precious metals also rose. Spot platinum rose nearly 1 percent to $1,531, extending the 1.8 percent climb in the previous session.
ROHIT KALIA
PGDM 3RD SEM
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