The JSE closed flat on Monday as rising tensions in the gold mining sector saw investors take flight from gold shares.
SINGAPORE - Gold ticked higher in cautious trade on Friday, heading for a fourth week of losses after this week&39;s brutal sell-off shattered investors&39; confidence in the typically safe-haven asset.
Bullion has been caught in a tug-of-war between physical buyers seeking bargains and wary investors cutting exposure to the precious metal on nagging worries about central bank sales and prospects of easing inflation.
Gold rose $6.61 to $1,397.36 an ounce by 0225 GMT, still within sight of a two-year trough touched earlier this week.
Gold investors are waiting for the 1930 GMT release of U.S. CFTC data showing the latest trading by hedge fund and money managers for more cues.
The drop in prices ignited a spate of buying in gold coins, nuggets and bars, sending premiums for gold bars to multi-months highs in Asia. Buying also improved in top consumer India after a lacklustre start.
"This gives us some confidence that as panic selling passes, prices can rebound by $100-150 an ounce and trade in the $1,400-$1,550 range over the next 3-6 months," said Mark Pervan, global head of commodity strategy at ANZ, referring to a pickup in physical gold sales in India and China.
"A key factor to watch will be gold ETF (exchange-traded fund) holdings, with a stabilisation in ETF holdings and then fresh ETF buying to restore some of the lost confidence for longer term gold investors."
U.S. gold futures for June delivery were at $1,396.90 an ounce, up $4.40, but the contract was within sight of Tuesday&39;s low of $1,321.50, its lowest level since late 2010.
Selling on COMEX, blamed on the outflows on gold-backed ETFs, was responsible for a rout in the cash market. Spot gold recorded its biggest ever daily fall in dollar terms on Monday, catching gold bulls, speculators and veteran investors by surprise.
Holdings on SPDR Gold Trust, the world&39;s largest gold-backed ETF, are at their lowest level in three years, and there was also speculation hedge fund manager John Paulson, a prominent gold bull, might have liquidated his huge gold stake.
Gold has ignored tension in the Korean peninsula and investors are increasingly convinced the U.S. Federal Reserve will soon end its bullion-friendly bond buying programme, which could ease inflationary pressure.
It rallied to an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus, raising fears the central bank&39;s money-printing to buy assets would stoke inflation.
Cyprus&39;s plan to sell excess gold reserves to raise around €400 million also led to speculation other indebted euro zone countries could follow suit.