SINGAPORE: Gold rallied more than 1 percent and silver jumped over 2 percent on Tuesday as investors returned in the new year with a renewed appetite for riskier assets such as commodities, although global economic worries still weighed on sentiment.
Better-than-expected manufacturing data from China fuelled interest among investors who had moved to the sidelines because of year-end credit tightness. A weaker dollar also helped fuel gains in commodities.
"Everyone is a bit more optimistic at the beginning of the year," said Ong Yi Ling, an analyst at Phillip Futures.
But Ong cautioned that the euphoria may not last long for gold as market sentiment remains fickle due to the shaky global economic outlook.
Gold could drop below $1,500 in the first quarter of 2012 and is unlikely to test its record high hit last September until later 2012, a Reuters poll showed.
Spot gold rose as much as 1.5 percent to $1,589.65 an ounce and eased slightly to $1,588.29 by 0724 GMT, rebounding from a 10-percent loss in December.
The most-active US gold futures contract rallied 1.5 percent to $1,589.50.
Iran's progress in its nuclear pursuit has gripped the oil market and could potentially support safe haven demand in gold. But for now, gold's move hinges on macroeconomic conditions and changes in risk appetite.
Investors await a raft of US economic data this week, including ISM Manufacturing PMI later in the day, factory orders on Wednesday and non-farm payroll data on Friday, after recent data showed that the world's top economy was recovering.
SILVER LEADS GAINS IN PRECIOUS METALS
Cash silver gained 2.2 percent to $28.41, leading the rally in the precious metals complex. US silver rose 1.8 percent to $28.41.
The metal, with extensive industrial applications, lost nearly 10 percent in 2011 as worries about the global economy weakened prospects of industrial metals.
"Silver is one of the more appealling trades of the new year, after a lot of positions have been emptied out," said a Singapore-based trader.
"Now the turn of the year has happened and we will probably see silver back on radar screens for some accounts, especially those with healthy tolerance for risk."
Managed money cut net length on US silver futures and options to 6,200 lots in the week ended Dec. 27, its lowest in more than three years, according to data from the US Commodity Futures Trading Commission.
Comments
Comments are closed for this article.