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Golds steadies above $1,570/oz ahead of EU summit

A move towards common euro-zone bonds at the summit, which had been seen as a potential solution to Europe’s three-year-old debt crisis, appeared to have been ruled out after German Chancellor Angela Merkel said it would not happen “as long as I live”.

Spot gold was up 0.1 percent at $1,573.59 an ounce at 1411 GMT, while US gold futures for August delivery were flat at $1,574.90.

The metal earlier rose to a session high of $1,583 an ounce as crude oil prices jumped, but its gains were short-lived. Moves have been exacerbated by light volumes, with Tuesday’s turnover on Comex gold futures about half the 30-day average.

Prices remained rangebound, with good support seen at $1,558 an ounce, analysts said, the low they fell to last week after the Federal Reserve disappointed gold bulls by holding off on a hoped-for further round of bullion-friendly quantitative easing.

The metal has tended to move in line with ‘risky’ assets like oil and equities this year, reversing its previous pattern of responding positively to heightened fears over the economy.

It has also tended to move against the dollar. Gains in the US unit, which rose 0.3 percent against the euro, helped cap gains in gold, keeping it within a narrow range.

Turkey, Russia, Kazakhstan and Ukraine were among the latest central banks to raise gold reserves, lifting their holdings by more than 25 tonnes between them in May, IMF data showed on Tuesday.

Physical demand languishes

Gold demand languished in major consumer India as record-high local prices resulting from the weak rupee kept buyers on the sidelines, traders said, though premiums stayed steady in Hong Kong, Tokyo and Singapore.

Traders in India are also waiting for the monsoon to pick up, which could boost the income of farmers, who buy more than half of India’s gold.

Data from three major Mints in Europe and North America showed on Tuesday that gold coin sales fell in the first quarter as the strong demand for small investment products that helped send gold to record highs in 2011 eased.

Holdings of gold-backed exchange-traded funds rose, however, to their highest since mid-March at 70.63 million ounces on Monday, according to Reuters data.

Lower silver prices also tempted some buyers back into the market. Holdings of the largest silver ETF, New York’s iShares Silver Trust, are up more than 232 tonnes so far in June.

Spot silver was flat at $27.07 an ounce, tracking gold. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, held near its 20-month high at 58.3.

“Investors are buying once more, with major physical ETF holdings up 2.2 percent from the early May trough,” Standard Chartered said in a note. “On a ratio basis vs. gold, silver is starting to look cheap.”

Spot platinum was down 0.6 percent at $1,411.25 an ounce, while spot palladium was down 1.6 percent at $581.75 an ounce, having earlier touched a 2012 low at $572.15 an ounce.