Gold weakens on thin volumes
San Francisco (Feb 17) Gold prices have fallen, with thinner volumes seen as the market approaches the Lunar New Year.
Gold for April delivery, the most actively traded contract, ended down 1.5 per cent at $US1,208.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
China vies with India for the top spot in terms of global consumption of the yellow metal, and the absence of traders at their desks during the extended holiday tends to mean lower demand and lower prices.
"New Year holidays in China begin tomorrow, and participants will be out through to Tuesday next week. The absence of this key physical market in a sense removes a natural cushion and therefore increases gold's downside potential," UBS analysts said.
In Europe, negotiations over how to keep Greece afloat broke down abruptly Monday, demonstrating a heightened state of uncertainty about the country's future inside the currency bloc. The collapse in talks among eurozone finance ministers leaves Greece and its lenders racing to reach a new financing deal for the indebted country before its existing bailout plan expires.
Still, the news had a limited impact on gold prices. Gold often attracts buyers during periods of political or economic uncertainty as some investors believe it will hold its value better than other assets.
"Given the stakes involved for Greece and the EU, and the Greek finance minister's background in game theory, it seems likely that negotiations will go to the wire, with gold likely to be rangebound until the situation becomes clearer," Leon Westgate, an analyst with Standard Bank, said in a note to clients.
Other precious metals tracked gold lower.
The April platinum contract fell to $US1,183.90 a troy ounce, its lowest since December 23, and in the early hours of Wednesday AEDT was down 1.9 per cent at $US1,184.20 an ounce. March silver futures dropped 5.4 per cent to $US16.365 a troy ounce, their lowest price since January 9.