Tuesday, 26 February 2013 01:11
NEW YORK: Gold rose on Monday on increasing hopes of a technical rebound after its recent selloff, and as euro zone fears related to an uncertain outcome for Italy's election lifted safe-haven buying.
Bullion climbed near $1,600 an ounce after early forecasts of Italy's election results raised the spectre of deadlock in the debt-laden country's parliament that could reignite the euro zone crisis. Global equities fell on the news.
Investors added gold positions on hopes of a rebound after hedge funds and money managers had cut their net long US gold futures and options positions to a four-year low, as improving market confidence globally and a Wall Street rally had hit gold's appeal.
"Gold had a 'near-term bottom-out' here. We had a steep selloff in the last few weeks," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank.
"We think there is a near-term opportunity for a bounce up," Florance said.
Spot gold rose 0.6 percent to $1,588.91 an ounce by 1:13 p.m. EST (1813 GMT), having hit a high of $1,594.20.
The metal has risen more than 2 percent in the last two sessions after it fell to a seven-month low of $1,554.49 on Thursday.
US gold futures for April delivery were up $15.90 at $1,588.70, with trading volume about 20 percent below the 250-day average, preliminary Reuters data showed.
The market will now focus on Federal Reserve Chairman Ben Bernanke's semiannual testimony to Congress on Wednesday for more clues about US monetary policy.
Overall confidence in gold remained fragile, however, with holdings of the SPDR Gold Trust falling 42.3 tonnes to 1,280.67 tonnes last week, its largest weekly outflow since August 2011.
Among other precious metals, silver rose 1.1 percent to $29 an ounce.
Platinum gained 0.7 percent to $1,615.99 an ounce, after prices fell to a five-week low of $1,593.45 last week. Palladium was up 1.3 percent at $745.72 an ounce, having fallen to a one-month low last week.
Copyright Reuters, 2013