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Gold Stays Close in Range Amid Global Growth Worry

Gold futures struggled to make advances on Wednesday as a stronger U.S. dollar and persisting worries about the health of the global economy constrained buyers.

Gold futures contracts for December delivery gained $0.90 to $1,765.80 per troy ounce in electronic trading.

The precious metal’s most actively traded contract held to a narrow range between $1,762 and $1,767.60 per troy ounce during Asian and European hours is losing ground for three consecutive days following the intraday high at $1,796.50 on Thursday.

Gold futures fell $10.70 or 0.6 percent on the Comex Division of the New York Mercantile Exchange overnight.

HSBC analysts led by James Steel wrote that with the market stumbling in sight of $1,800 per troy ounce, we believe that the path of least resistance is lower, at least in the near term.

The analysts said that although bullish calls on gold have nearly doubled in the past two months and stockpiles at exchange-traded funds have risen to record levels, additional monetary-policy easing in the U.S. and other countries is no longer a sufficient catalyst.

The group wrote that it does not anticipate further significant buying of gold based on monetary policy accommodation alone. In this light, the bullion market price could drop to $1,750 per troy ounce or lower in the near term, the analysts said.

In a research note on Wednesday, analysts at Commerzbank said they don’t foresee any prolonged drop in gold, saying this should be precluded in particular by continued inflows in the gold ETFs.

The note continues, saying over the past two days, ETF holdings have risen by a further 13 tons, 191 tons of gold having flowed into ETFs since the end of July. Per the analysis at Commerzbank, the bigger ETF interest in gold is generated by ultra-loose central bank monetary policy, pushing fears of reduced purchasing power and currency devaluation.

The persistent crisis in the euro zone remains a dominant theme in market analysis with Spain stalling the formal request for a bailout and the recent International Monetary Fund recently voicing concern about continuing capital flight from euro zone peripheral countries.

The gold price is well supported against this backdrop, per the analysis from Commerzbank.

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