Gold goes down after an 8-week high (Reuters) (31-01-2011)

SINGAPORE – Gold was down on Monday, leaving back its eight – week high hit in the previous session on the political unrest in Egypt. The buying interest though in the physical market offered support and offset worries about declines in ETF holdings.

Spot gold fell $1.05 to $1,337.25 an ounce by 0724 GMT, having earlier risen to around $1,345 while is expected to temporarily end the rebound around $1,348 and retrace to $1,320 as the sharp surge on Friday is regarded as part of a wave (4) correction.

Gold dropped to as low as $1,308 on Friday, its weakest since early October 2010, before reversing losses on safe haven buying related to the chaos in Egypt and U.S. gold futures for February fell $3.4 an ounce to $1,337.30 an ounce, having ended up nearly 2 percent on Friday.

In the physical sector, premiums for gold bars were at their strongest level since at least 2004 on tight supply, short covering before the festive season in India and China as well as physical buying driven by the deadly protests in Egypt.

Silver was at a 1-week high, tracking gold's earlier gains. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings slipped to 1,224.118 tonnes by January 28, it’s lowest since May of last year.

Brent oil futures climbed near $100 a barrel and Asian stocks fell on Monday, hurt by fears that the deadly protests in Egypt may foment unrest throughout the Middle East and choke oil supplies, accelerating a move out of riskier assets.

Source: Reuters