By: Reuters
Investors are watching a conference call among Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and German Chancellor Angela Merkel, set for 1600 GMT, amid renewed talk among euro zone policymakers about a Greek default.
Spot gold held steady on Wednesday, as investors flocked to bullion for safe haven from fears of crisis contagion in Europe while technical weakness and a strong dollar weighed on prices.
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"Technically we are running into a challenging situation over the next 2-3 days, as the uptrend from the beginning of July faces a short-term correction," said Dominic Schnider, head of commodity research of UBS Wealth Management in Singapore.
The dire situation in Europe is expected to hold up the uptrend despite the chance of a brief consolidation, he said.
"People are realizing the euro concept, not just the debt problem, has major flaws and if they are not changing dramatically in the set-up, we are going to end up in a huge crisis. This degradation is happening right now and warranting higher gold prices."
Spot gold [XAU= 1826.59
-6.71 (-0.37%) 
] inched up 0.4 percent to $1,840.36 an ounce by 0238 GMT, after rising 1.1 percent in the previous session.
U.S. gold [GCCV1 1828.50 -1.60 (-0.09%) ] rose 0.8 percent to $1,844.
Technical analysis suggested that U.S. gold could move sideways in the next few weeks, while commodities as a whole may correct moderately by the end of the year, said Reuters market analyst Wang Tao.
The strength of the dollar also kept gold's gains in check. The greenback edged higher against a basket of currencies [.DXY Loading... ()], on course for a tenth day of gains since Aug. 30.
The dire situation in Europe is expected to hold up the uptrend despite the chance of a brief consolidation, he said.
"People are realizing the euro concept, not just the debt problem, has major flaws and if they are not changing dramatically in the set-up, we are going to end up in a huge crisis. This degradation is happening right now and warranting higher gold prices."
Spot gold [XAU= 1826.59
-6.71 (-0.37%) ] inched up 0.4 percent to $1,840.36 an ounce by 0238 GMT, after rising 1.1 percent in the previous session. U.S. gold [GCCV1 1828.50
-1.60 (-0.09%) ] rose 0.8 percent to $1,844. Technical analysis suggested that U.S. gold could move sideways in the next few weeks, while commodities as a whole may correct moderately by the end of the year, said Reuters market analyst Wang Tao.
The strength of the dollar also kept gold's gains in check. The greenback edged higher against a basket of currencies [.DXY Loading... ()
], on course for a tenth day of gains since Aug. 30.Although heightened worries about the euro zone's future buoy safe haven demand in gold, investors are aware of short-term weakness and market sentiment was fickle.
"People buy and sell fast like a gust of wind," said a Singapore-based dealer, adding that physical purchases picked up when prices drop towards $1,800 and dried up after prices recover.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust [GLD 178.54
1.87 (+1.06%) ], edged lower to 1,241.311 metric tons by Sept. 13 from a 2-1/2-week high of 1,241.917 metric tons on September 9.
"People buy and sell fast like a gust of wind," said a Singapore-based dealer, adding that physical purchases picked up when prices drop towards $1,800 and dried up after prices recover.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust [GLD 178.54
1.87 (+1.06%) ], edged lower to 1,241.311 metric tons by Sept. 13 from a 2-1/2-week high of 1,241.917 metric tons on September 9.Copyright 2011 Thomson Reuters. Click for restrictions.
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