SINGAPORE, Jan 8 Purchases from jewellers and investors lifted the price of gold on Monda

By Staff
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SINGAPORE, Jan 8 (Reuters) Purchases from jewellers and investors lifted the price of gold on Monday, but dealers said trade was cautious after the metal tumbled more than 2 percent in New York on fund selling.

Japanese investors were out of action due to a public holiday.

Spot gold hit a low of $606.20 an ounce before rebounding to hit an intraday high of $609.30 an ounce. It was quoted at $608.75/609.50 an ounce by 0622 GMT.

Gold was last quoted at $606.70/607.70 in New York on Friday, when the metal fell to its lowest level in more than two months at $601.70 after the dollar surged on a surprisingly strong U.S. jobs report.

Friday's fall was gold's biggest one-day percentage drop in three months.

''There's a little bit of buying because of the lower price.

On the whole, there is some interest in Asia,'' said Leon Lee, a dealing officer at the Bank of China in Hong Kong.

Lee pegged support at $602, while gold may find resistance around $609.

Shares in Australian gold miners suffered, with Newcrest Mining Ltd. falling 3.87 percent, Oxiana Ltd. down 4.78 percent and Lihir Gold losing nearly 2 percent.

''Whilst we see risks of further losses in gold if the dollar appreciates further, we would expect some rebound in some of the base metals if the U.S. economy is seen to be stronger, possibly in copper and likely zinc,'' said Investec Australia in a daily report.

It pegged support at $600 an ounce -- a level last seen in October 2006.

Metals such as copper have fallen sharply since the start of 2007 amid concerns about slowing global growth prospects and a rise in the supply of many key industrial commodities.

''If you want to blame something, you can say a sliding oil price and currencies such as sterling have put a negative sentiment on gold. However, support can be seen at around $600,'' said a dealer in Singapore.

''I am not worried about the sell-off. It's only the hedge funds playing the market. Even if we have a quick dip to $599.10, I think it's all fine,'' he said.

In addition to gold, base metals and other commodities were hit by fund selling on Friday. Gold has lost more than 5 percent in value since touching its highest in nearly a month at $644.90 an ounce last week.

Benchmark gold futures on the Tokyo Commodity Exchange, currently December 2007, fell 45 yen per gram to 2,397 yen at the close on Friday.

The euro hardly moved at $1.3007 , within sight of the six-week low hit around $1.2980 on Friday after the U.S. jobs report.

The Labor Department said the U.S. economy generated 167,000 new jobs in December, well above market expectations of a rise of 100,000.

In other precious metals, silver slipped to $12.12/12.18 an ounce from $12.18/12.25 an ounce. It tumbled to its lowest level since late October at $12.03 an ounce on Friday.

Platinum rose to $1,108/1,113 an ounce from $1,105/1,110.

Palladium dipped to $330/335 an ounce from $331/336 in New York.

REUTERS CS RAI1227

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