Singapore: Gold edged down on Wednesday from a 2-1/2-week high as concerns about Greece's ability to implement an unpopular bailout deal balanced out the gains triggered by the actual agreement, and slower factory activity in China contributed to the fall.
Spot gold rose to USD1,759.84 an ounce in early trade, its highest level since February 3, before reversing course to fall 0.2 percent to USD1,755.16 an ounce by 0330 GMT.
U.S. gold was little changed at USD1,757.
Cash gold staged its biggest one-day rise in two weeks on Tuesday, climbing 1.5 percent along with riskier assets after euro zone finance ministers gave the greenlight to the 130-billion euro bailout for Greece.
The euphoria quickly faded, however, as worries about implementation resurfaced, and data pointing at a continuous contraction of China's massive manufacturing sector added to the gloom.
Gold has been seesawing in the range between USD1,700 and USD1,760 since late January, tracking Greece's torturous path to securing the bailout, while physical demand provided limited support.
"We don't see a substantial amount of enquiries in the physical market, either from the industrial or the jewellery sector," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
China's physical demand has slowed since the Lunar New Year celebrations in January, and India's demand from its jewellery sector is also declining, Poon added.
Technical analysis suggested that spot gold could break above USD1,760 and trade in the range between USD1,766 and USD1,771 during the day, said Reuters market analyst Wang Tao.
INDONESIA SCRAP SELLING
The gains in gold prices over the past few days have triggered some scrap selling, especially from Indonesia, dealers said.
"Yesterday, the domestic prices in Indonesia were much lower than the international market, and people were taking advantage of the price disparity," said a Singapore-based dealer.
Gold bar premiums in Singapore dipped to USD0.7-USD1 an ounce from previously USD1.20, as a result, she added.
Spot platinum pierced through the 300-day moving average and hit USD1,701.5 an ounce, its highest in nearly five months, before retracing slightly to USD1,696.50.
The gold-platinum spread dropped to below USD60 an ounce, its lowest since late September, down from a peak near USD220 in early December.
Traders said the rapid gains in platinum could be a combination of a breakthrough of a key technical resistance and ongoing worries about supply in top producer South Africa.
"Platinum cleared the previous high hit in November, so some long-positions holders could be adding to their positions," said a Tokyo-based trader, adding that industrial demand for the metal remained sluggish.
First Published: Wednesday, February 22, 2012, 10:11