LONDON: Gold climbed to a three-week high on Monday, boosted by fresh investor interest and a softer dollar against the euro after a G20 summit reinforced hopes that European leaders would soon resolve the region’s debt crisis.
Spot gold rose 1 percent to hit $1,694.60 a troy ounce, its highest since Sept. 23. It was bid at $1,685.30 an ounce at 1243 GMT from $1,678.53 late in New York on Friday.
The euro touched a one-month high against the dollar as the market focused on the potential for a positive outcome from a European Union summit scheduled on October 23.
"Gold is moving higher on a modestly weaker dollar. There is some optimism that European political leaders will come up with some deal to ease debt concerns," said Ross Norman, chief executive at bullion brokers Sharps Pixley.
"There is scope to see a little bit more strength here, but I don’t think the market is going to run away."
A lower dollar makes metals priced in the US currency cheaper for holders of other currencies.
Analysts expect $1,700 an ounce to offer firm resistance and said a decisive move above could take several attempts, but support is seen at the 100-day moving average at about $1,660 an ounce.
The dollar recovered briefly after a gauge of manufacturing in New York State contracted for the fifth month in a row in October.
"Investors are active again, there is strong buying interest in Asia, but whether that will hold if we climb above $1,700 remains to be seen," a precious metals trader said.
NET CFTC positions
Holdings of the largest gold-backed exchange-traded fund (ETF), New York’s SPDR Gold Trust and that of the largest silver-backed ETF, New York’s iShares Silver Trust, remained unchanged on Friday from Thursday.
"According to the (US) Commodity Futures Trading Commission’s Commitment (CFTC) of Traders report, net long positions for gold and silver increased 373,000 ounces and 9.5 million ounces, respectively, in the week ended 11 October," HSBC said in a note.
"Platinum net long positions fell 47,000 ounces and palladium net long positions increased 95,500 ounces."
Spot silver was bid at $32.27 an ounce from $32.16 late on Friday and platinum was at $1,568.25 from $1,544.13 an ounce.
"Platinum continued the decrease in net positions from last week as shorts increase while palladium did the opposite with net positions increase as shorts decrease," HSBC said.
"The small increase in net position for gold and silver was mainly driven by a decrease in short positions."
Spot palladium touched $644.25 an ounce, the highest since Sept. 28. It was last at $631.75 an ounce from $619.70 an ounce late on Friday.
Both platinum and palladium used in autocatalysts have come under pressure in recent months as markets tried to factor slower economic growth and demand.
