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London: Gold came under selling pressure on Thursday but analysts expect prices to be supported by fears the $700 billion (Dh2.57 trillion) bailout plan for investment banks in the United States could be derailed by Congress.
Spot gold was at $871.60/$873.60 an ounce at 14.55 GMT compared with $881.00 late in New York on Wednesday. Earlier on Thursday it rose nearly two per cent to $896.60 an ounce.
It fell more than two per cent to $862.85 an ounce after the US open as equity markets firmed and traders sold to cover positions related to the expiry of gold options - contracts which give holders the right to buy or sell at fixed prices.
The metal has gained about 20 per cent since September 11, when a collapse in the share price of US investment bank Lehman Brothers raised questions about the stability of the banking system.
"Weekends recently have tended to be perilous times," said Nick Moore, commodities strategist at RBS.
"There is concern that the weekend could bring fresh concerns about the bailout plan because of political dragging," he said.
The US Congress is close to reaching a deal to approve the package, but investors are wary.
Gold is mainly used as hedge against financial chaos.
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