US gold futures reversed course to edge higher Wednesday morning after US July durable goods orders fell much more than expected, traders said. Metals prices got on the upswing while the dollar weakened after a report showing orders tumbled 4.9 percent last month, against expectations for a 1.2 percent decline.
"The durable goods number was just awful and this is probably a bit of short covering in gold from the trade houses," said an East Coast desk trader.
"A weak dollar is the driving factor behind the higher gold price, but I don't expect much on the upside as you still have the overhang from the commodity funds who are long," he said.
By 9:57 am EDT (1357 GMT), December delivery gold on the New York Mercantile Exchange's COMEX division was up 90 cents at $445.20 an ounce, dealing from $442.50 to $445.70.
But despite the morning's gains, gold had not broken out of a consolidation pattern and prices should stay range-bound until at least Friday when OTC (over-the-counter) options expire and the $450 strike price probably comes into play, dealers said. The level of participation in the gold market is high on a historical basis. Open interest in COMEX gold had increased to a huge 331,644 contracts as of August 22.
Spot gold advanced to $439.70/440.40 an ounce, up from its last late New York quote at $439.10/9.80. The morning fix in London was at $438.25.
September silver gained 0.7 cent to $6.975 an ounce, trading $6.935 to $7.02. Rollover into December futures continued steadily before delivery period begins next week.
Chesler said that if silver does not find traction soon, it could break down sharply to test levels below $6.50/oz. Spot silver was unchanged at $6.95/98.
In NYMEX trade, October platinum rose 90 cents to $899 an ounce. Spot platinum fetched $896/900.
Illiquid September palladium gained 45 cents to $186.20 an ounce. Spot traded at $183/186.
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