By Allen Sykora
Of DOW JONES NEWSWIRES
Gold futures finished modestly higher on short covering Wednesday ahead of a Group of 20 economic summit, but the market was largely flat as traders wait for the outcome of the Thursday meeting.
Still other key events occurring this week include a European Central Bank meeting Thursday and the always-important U.S. monthly jobs report on Friday.
“Everybody is really gun-shy,” said Rob Kurzatkowski, futures analyst with optionsXpress. “It’s not just the precious metals. It seems like commodities and equities are treading water and not doing much.”
June gold rose $2.70 to $927.70 an ounce on the Comex division of the New York Mercantile Exchange. May silver dipped a penny to $12.975.
Some traders covered positions, not wanting to remain short ahead of the G20, Kurzatkowski said. This also helped underpin silver, even though this metal finished marginally softer, he added.
Traders were generally pausing ahead of the G20 and other events during the latter part of the week, Kurzatkowski said. In the case of the G20 in particular, the market will be watching to see if Russia and China push for and make any progress in an effort to move the world away from the U.S. dollar as the world’s main reserve and trade currency, he said. If so, this would have negative implications for the dollar and thus support gold.
But on the other wide of the coin, the market will be watching to see if global leaders develop a “concrete framework for a road map to recovery,” Kurzatkowski said. This likely would be bearish for gold, he said.
Traders also will be monitoring leaders’ remarks in post-meeting press conferences, he said. If there are vastly differing views on how the world should deal with the economic crisis, this might support gold. But if there are similarities, gold could soften, he said.
Meanwhile, Kurzatkowski described the lack of any Indian gold imports in March due to high prices – as announced by the Bombay Bullion Association overnight – as a negative for gold. However, the metal also got positive news when the Istanbul Gold Exchange’s Web site showed that Turkey imported 40 kilograms in March after importing none the previous two months.
Kurzatkowski characterized other conflicting factors as well.
“Some gold bugs are frustrated that governments keep printing money like it’s Monopoly money, yet gold has not responded positively to it,” he said. This is expected to lead to inflation, and gold is often bought as an inflation hedge.
However, he said, the improved tone for equities – helped Wednesday when data such as the Institute for Supply Management manufacturing survey was stronger than expected – is holding back gold since it means less safe-haven buying.
Kurzatkowski put support for June gold around $920, then the $900 area. He listed resistance near $961.
For May silver, he pegged “stout” support around $12.50.
“That’s a make-or-break level for the silver market,” he said. “If it fails, we could pull back to $11 or $10.50.”
He listed minor resistance around $13.50, with stronger resistance around $14.
Meanwhile, July platinum rose $15 to $1,143.80 an ounce, while June palladium gained $2.80 to $221.60. There might have been some light speculative buying in thin trading conditions, but with no major fundamental catalysts, a trader said.