US gold futures rose almost 1 percent on Thursday, near their loftiest level in more than five months, as investors poured funds into the market after a key technical resistance was breached and oil prices steadied.
At 10:35 am EST (1535 GMT), most-active gold for February delivery on the COMEX division of the New York Mercantile Exchange was up $5.60 at $653.80 an ounce, trading between $645.80 and $654.80 an ounce - near its 5-1/2-month peak of $655.50, hit on August 11.
February COMEX gold options were due to expire at the close of market Thursday, and traders said that might have explained the contract's gain. James Quinn, commodity commentator at A.G. Edwards, said there was an influx of buying in the market as the oil market recovered from its lows and the dollar has weakened of late.
"The return of investment interest on the break above $636, which is the 200-day moving average - I think that's fuelling some investment interest here in the market," Quinn said. Quinn said gold this week had been fundamentally underpinned by the talk that China might possibly acquire additional bullion and other minerals as part of its strategic reserve.
George Nickas at FC Stone, however, said he was somewhat surprised by gold's unusual strength before the first notice day of the February contract next Wednesday. As the first notice day approaches, investors have to decide whether to roll the February futures into the April contract, and that may create additional activity in the market.
Nickas attributed gold's gain to some short covering ahead of the Federal Reserve Open Market Committee meeting beginning next Tuesday. Oil held above $55 a barrel, supported by cold weather in top consuming regions and by Washington's decision to increase emergency fuel reserves.
US crude was slightly lower by mid-morning. Gold is generally seen as a hedge against oil-led inflation. Spot gold was quoted at $652.20/3.20 an ounce, compared with $647.20/8.20 traded late Wednesday. London's gold fix was $651.75.
In other precious metals, silver hit a fresh six-week high. COMEX March silver was up 27.2 cents, or 2.1 percent, at $13.545 an ounce, trading between $13.245 and $13.600. Spot silver climbed to $13.450/3.520, against $13.180/3.250 an ounce in late Wednesday trade. Silver was fixed in London at $13.380 an ounce.
NYMEX April platinum rose $15.90 at $1,189 an ounce, near its eight-week high. Spot platinum fetched $1,177.00/83.00. NYMEX March palladium was up $3.85 at $353 an ounce, after hitting a four-month high of $356.85 in early session. Spot palladium was quoted at $349/354.00.
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