Gold rose 1 percent on Tuesday, breaking ranks with equities for a second session, as losses in equities triggered safe-haven buying in the bullion market, which had sustained a recent sell-off. The precious metal posted its fourth straight daily rise, its longest streak in two months. Some investors took advantage of the lower prices to re-enter the gold trade. Gold had a sharp price pullback during a recent strong run of US data that dashed hopes of US monetary easing.
Bullion, along with safe-haven US Treasury debt prices, was boosted as buying accelerated after the US equities benchmark S&P 500 broke below key support before the start of the first-quarter earning season. Technical and options-related buying in gold also helped. "There is still a tremendous amount of open interest above the $1,800 strike in the longer-dated options, which is encouraging," said Anthony Neglia, president of Tower Trading and a COMEX gold options floor trader.
Spot gold was up 1.1 percent at $1,658.36 an ounce by 2:09 pm EDT (1809 GMT), reversing initial losses after having traded as low as $1,631.70. US gold futures for June delivery settled up $16.80 at $1,660.70. Tuesday's rally was on modest trading volume, which is on track to be the strongest in a week, preliminary Reuters data showed. Gold prices were still 7 percent lower from a high near $1,800 an ounce at the end of February as the so-called risk assets have struggled.
The metal has largely taken to follow the equities market so far this year, but disappointing US jobs data last Friday appeared to break that trend. Other traders cited program buying by several funds and technical support for gold's rise, with the metal vulnerable for a pullback due to a lack of physical demand. "In the near term, we will see the market trade sideways because there is no real fundamental driver but there is also no reason to let it go," said Fred Schoenstein, a trader at Heraeus Precious Metals Management.
Gold demand in top buyer India has struggled to recover following the end of a three-week jewellers' strike. Daily gold sales in India in the last two days are down 80 percent from a year ago. Silver underperformed gold. It rose 0.1 percent to $31.55 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to over 52, its highest at since early January on Tuesday. Spot platinum was down 1 percent at $1,590 an ounce, while spot palladium fell 0.8 percent to $633.38 an ounce.
Comments
Comments are closed for this article.