Spot gold was bid at $932.90 an ounce at 1420 GMT, against $932.35 an ounce late in New York on Thursday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange eased 70 cents to $933.90 an ounce.

Prices awaited new direction from the currency markets, currently the main driver of gold. Gold becomes cheaper for holders of other currencies as the U.S. dollar slips.

“If you are looking at the ups and downs of gold in its narrow trading range, it is more or less a reflection of the swings in the euro/dollar exchange rate,” said Peter Fertig, a consultant at Quantitative Commodity Research in Germany.

The dollar fell broadly as improved U.S. data fuelled hopes of an economic recovery. It later pared gains against a basket of currencies, however.

Moves in the currency remained limited ahead of a two-day Fed policy meeting next week. As long as the currency markets remain rangebound, gold will also be hemmed in.

Factors such as jewellery buying, safe-haven demand and inflation hedging are all likely to remain subservient to the influence of currencies, analysts said.

“Inflation expectations are not there just yet, and the precious metal could see even more losses if equities bounce back up,” VTB Capital said in a note.

“Gold’s attractiveness as a safe haven asset is virtually zero at the moment, which is evident from the unchanged speculative positions in gold futures or ETFs,” it added.

On other markets, European shares extended gains early afternoon, while U.S. stocks opened higher as appetite for equities picked up. Oil firmed a touch after bullish economic data helped the demand outlook.

WIDER MARKETS

Holdings of the major gold exchange-traded funds were stable, as investors awaited clues from the wider markets. Another wave of bad news on the economy could unleash new inflows, however, analysts said.

The U.S. Senate signalled its approval of a long-planned sale of just over 400 tonnes of gold by the International Monetary Fund on Thursday.

UBS analyst John Reade said in a note: “There are lots of uncertainties regarding the sale but we do not expect this to be a negatively disruptive factor to the gold market.”

“If the gold is taken by other official sector buyers (it) could be a very positive development for the market,” he added.

Silver was at $14.22 an ounce against $14.19. Platinum was at $1,206 an ounce against $1,200, and palladiumat $240.50 against $238.

ETF Securities said holdings of its ETFS Physical Palladium fund rose to a record on Thursday, up just over 3,000 ounces or 1 percent to 315,572 ounces. The fund’s reserves are up 10,000 ounces or 3.3 percent week-on-week.

LONDON, June 19 (Reuters

Nickel was back over $12 at the New York open, but couldn’t hold there, falling to $11.906/lb., down 8 1/3 cents. Zinc rallied to near $1.04 at the noon hour but hit the skids thereafter and wound up losing nearly a penny and a quarter, at $1.0125/lb. Aluminum pushed higher for most of the day, just slipping at the end to $1.3306/lb., up 2 cents, while lead was sharply up and then down to little effect as it lost a bit more than a third of a cent, to $1.0113/lb.

Copper was up the most in more than a week as traders expressed their concern about supply shortfalls.

Inventories monitored by the LME dropped 575 metric tons yesterday, or 0.5%, to 120,850 tons. It was the biggest decline since May 7.

“Inventories are very low,” Helen Henton, head of commodity research at London-based Standard Chartered Plc, said yesterday. “With any supply disruptions, we have the potential for the market to push prices higher.”

Perhaps so, but there isn’t a lot of optimism out there.

“We are swinging back towards the upside, but trading lacks conviction, with prices hemmed in within narrow trading bands in most of the metals,” said MF Global analyst Edward Meir. “A weaker dollar is supporting the complex, but a distinct lack of buying out of China, especially on the copper side, is keeping the upside potential in check.”

UBS analyst John Reade concurred, saying that, “We are loathe to be long base metals in general at the moment as prices are elevated by speculative length and the prospects of ongoing production disruption … Consumer demand is soft, based on our conversations with the trade.”

In company news, Reuters wrote that: “Chinese interests have approached a major Australian superannuation and investment fund to be their partner in a multi-billion-dollar swoop on 9 percent of BHP Billiton The Australian newspaper reported.

“Under the terms of the proposed deal, the Chinese would take 4.5 per cent of BHP Billiton, while the other half would be split between the Australian fund and a global private equity investor, the paper said on it’s Web site.”

Source: Copper Rises Most in a Week