Gold was steady in Asia Tuesday after rallying in late New York trade Monday.
The rally, which tracked strong U.S. equities, was the first strong upside move since the start of the month but participants aren’t convinced that it represents a trend reversal.
“I think if we see some good second-quarter earnings (in the U.S.) this week, gold could test higher, but overall we think the (short-term) trend is still lower,” said Adrian Koh, an analyst at Phillip Futures in Singapore.
Mitsui Global Precious Metals said in a note that it was also looking for a test of USD900.
“Right now there are no major push factors significantly capable of extending gold to the upside. The physical market is largely disengaged, waiting for the fall towards $880,” the note said.
Mitsui said long exposure on futures exchanges was still excessive at 22.7 million ounces at the end of last week, well above the 2009 average of 20.7 million ounces.
“Therefore, we are concerned that a raft of liquidation action is around the corner as investors look to offload stale long positions,” it said.
At 0650 GMT, spot gold was at $919.55 a troy ounce, down $1.25 since the New York close. On Tocom, June 2010 gold was at Y2,770/gram, up Y63.
Spot silver was at $12.83/oz, unchanged from overnight, but traders will be watching silver closely for signs of a relative trend reversal versus gold. Silver is down 22% from its early June highs compared to gold’s retreat of 8%.
The Gold/silver ratio is now at 71.7 and a close lower than yesterday’s 71.9 would be confirmation ratio is likely to move lower, said ScotiaMocatta in a note.
Platinum was also higher at $1,115.50/oz, up $2.50 and could be bolstered by expectations the U.S. auto sector may show signs of recovery in the third quarter.
Barclays Capital said in a note that the sector could see a “substantial turnaround in output growth,” helped by the ‘cash for clunkers’ vehicle scrapping programme.
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