US GOLD OPEN - Comex gold unable to seize on Cyprus uncertaint

Gold futures languished just under $1,600 an ounce Wednesday as the debt drama in Cyprus and strong central bank buying has not proven potent enough to overcome waning market sentiment.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last up $2.00 at $1,593.80 an ounce. Trade has ranged from $,591.90 to $1,601.60.
“Gold is currently no longer able to profit from the politically-driven financial markets and the resulting uncertainty among market players,” Commerzbank AG said in a note. “Under pressure from a firmer US dollar, the yellow precious metal has slipped below the $1,600 mark again this morning."
Banks in Cyprus are set to reopen tomorrow and some still fear a liquidity flight after high deposit accounts were raided and the country's second largest bank was ordered to close to secure an EU, IMF, ECB troika rescue.
“If you're a gold bull you have to have an uncomfortable feeling this morning. We're just a day away from a historic run on the banks in a major European financial hub, yet gold can't be bothered to pop above $1,600,” a US-based gold trader said.
“It wasn't too long ago that these types of eurozone headlines would be followed by a $100 rally and record highs,” the trader added.
Additionally, favourable economic data from the US continues to pressure gold, which in turn suggests that the metal remains a safe haven instrument that isn't readily benefiting from safe haven developments, the CME Group said in a market commentary.
“Concerns toward the Italian financial and political situation might also be providing some minor support for gold prices but until there are major developments from Cyprus or Italy, the bear camp might be set to prevail,” CME added.
In the wider-markets, the euro was about a cent softer at 1.2772 against the dollar, while Germany's DAX and France's CAC-40 were last down 1.23 percent and 1.68 percent, respectively.
“The dollar is firm and the euro is weak as Cyprus will not recede from the front of the forex stage and remains the glaring klieg lights despite assurances to the contrary by the political leaders there that Cyprus is a one off event, a unique circumstance, an aberration that should be dismissed out of hand,” Dennis Gartman, editor of the Gartman Letter, said.
“[But] everyone knows the scene is horrific and everyone knows that [it's] only going to get worse, not better,” he added.
However, in supportive data, central banks have taken advantage of lower prices to add to their gold reserves. In February, the Russian central bank increased its gold holdings by 7 tonnes to 976.95 tonnes. Other buyers included Kazakhstan (4.9 tons), Mongolia (1.5 tons), Azerbaijan (1 ton) and Ukraine (0.6 tons), according to the International Monetary Fund.
“The standout buyers remain US dollar laden central banks. We believe portfolio diversification of foreign exchange reserves is an important element in this bank gold purchase strategy,” James Steel of HSBC said in a report.
“While gold may remain on the defensive in the near-term, especially as trading conditions may be thin going into the holiday weekend, we continue to expect high levels of global liquidity to eventually buoy gold prices,” Steel added.
In the other precious metals, Comex silver for May delivery was down 34.4 cents at $28.335 an ounce. Trade has ranged from $28.125 to $28.785.
“At least initially, silver has outperformed the gold market on the downside in the early Wednesday trade action. In fact, the May silver contract overnight fell down to the lowest level since the early March spike down washout,” CME said.
Platinum futures for April delivery were up $7.60 at $1,577.40 an ounce and the June palladium contract was at $759.95 an ounce, down $1.45.