Gold climbs back above $1,180/oz as European stocks wilt
London (Apr 27) Gold edged back above $1,180 an ounce on Monday, recovering from the previous session's five-week low, as lingering concerns over Greece pressured European stocks, curbing a broad-based rally in equity markets.
Investors are now focusing on the Federal Reserve's policy meeting this week for clues on the timing of a U.S. rate hike. Some are betting it will be forced to wait until later this year, instead of June as was expected a short time ago, before raising rates from record lows.
However, any sign that rates are on course to rise sooner rather than later could pressure gold. The metal is down 2 percent this year on expectations for a rate rise, which would lift the opportunity cost of holding non-yielding bullion while boosting the dollar.
Spot gold was up 0.3 percent at $1,182.45 an ounce at 1012 GMT, while U.S. gold futures for June delivery were up $6.80 an ounce at $1,181.80. On Friday spot prices slipped as low as $1,174.73 an ounce.
"(Gold's failure) to rally much above $1,180 probably gives an indication of positioning ahead of the FOMC this week, and further guidance on interest rates," Mitsubishi analyst jonathan Butler said.
European shares edged lower in early trading on Monday, with lingering concerns over Greece's debt situation prompting investors to trade cautiously at the start of a new week.
That brought to an end a rally in world stocks that saw Asian equities hit a 7-year high overnight, and the Nasdaq Composite and S&P 500 chalk up record closes on Friday.
Attention is now turning back to policy signals from the U.S. central bank. The Fed will start a two-day policy meeting on Tuesday, with investors watching out for comments on the strength of the economy and the timing of monetary tightening.
"Market consensus does not expect the first rate hike to be announced at this week's meeting, but comments are likely going to be closely watched especially in light of Q1 GDP which is also due to be released this Wednesday," UBS said in a note.
Physical gold demand in the major Asian markets was positive overnight after last week's price fall, dealers said, with Shanghai premiums moving up towards $4 an ounce.
Silver was up 0.6 percent at $15.79 an ounce, while platinum was down 0.3 percent at $1,118.50 an ounce and palladium was down 0.3 percent at $768.55 an ounce.