Gold rose on Monday after falling in the last two sessions, as worries about a widening European sovereign debt crisis and a sharp decline in the euro prompted safe-haven buying. Bullion climbed as the euro slumped to two-month lows against the dollar and Swiss franc as a rescue package for Ireland failed to soothe worries other debt-stricken eurozone members may also seek bailouts.
With risk aversion still running high, the typical inverse correlation to the dollar collapsed, with the 25-day gold/dollar correlation weakened to the weakest level in a month. Investors fear that Portugal may be the next country that struggles with its sovereign debt after Greece and Ireland were forced to seek bailouts from the European Union earlier this year.
"You have seen moves in the currency markets that are offsetting, to an extent, the sovereign concerns," said RBS Global Banking & Markets analyst Daniel Major. Spot gold climbed 0.3 percent to $1,365.15 an ounce at 1:57 pm EST (1857 GMT), poised to snap a two-day losing streak.
US December gold futures settled up $3.60 at $1,366. COMEX volume looked about 15 percent above the 30-day average, as futures investors rolled over to February contracts from December futures ahead of December's first-notice day on Tuesday. Some analysts pointed to a potential head-and-shoulder pattern as a bearish technical explanation for why gold did not rally strongly on concerns about the fiscal health of eurozone economies and rising tensions on the Korean peninsula.
However, Adam Hewison, president of MarketClub.com, said the trend of the MACD momentum indicator model is "really starting to turn up" on gold charts, and the fact that the MACD came down from an oversold level suggests the odds for a bearish head-and-shoulder move is low.
UBS analyst Edel Tully said in a note that the brokerage's physical gold sales to top bullion consumer India last Friday were the largest since October 27, when gold prices slipped. On the supply side of the gold market, data showed Australian gold production rose 22 percent in the third quarter to 67 tonnes. Australia is the world's second-biggest gold producer after China.
Silver rose 1.8 percent to $27.13 an ounce. The world's largest silver exchange-traded fund, the iShares Silver Trust, said its holdings fell to 10,711.23 tonnes on November 26 from a record high. Similarly, COMEX silver volume exceeded 127,000 lots, one of the most-active days on record, as investors rolled over to March from December contracts ahead of first-notice day.
Comments
Comments are closed.