US gold futures ended higher on Monday on bargain hunting and steadying oil prices, after they finished almost two percent lower in the previous session, and traders said investment interest in the precious metal remained robust.
Most-active gold for April delivery on the Comex division of the New York Mercantile Exchange settled up $4.60 at $656.10 an ounce, traded in a narrow range between $651.20 and $657.50 an ounce.
Estimated volume was 10,000 contracts, and options turnover was 22,000. Turnover in the Chicago Board of Trade's electronically traded 100-oz gold contract was 28,861 contracts as of 2:31 pm EST (1931 GMT).
Bernard Hunter, director of precious metals marketing at bullion dealer ScotiaMocatta, said that gold was retracing its losses after Friday's sell-off, helped by better oil prices and a low interest-rate environment. The April contract dropped 1.7 percent on Friday, largely hurt by fund and technical selling.
"The underlying trend is still there. And there is certainly interest in the market, particularly from the fund sector," Hunter said. Oil rose as a blast of cold weather was forecast to boost heating fuel demand in the United States, the top consumer of the oil product.
US crude oil, however, traded slightly lower after the conclusion of gold trading by mid-afternoon on Monday. "The gradual rise in energy prices appears to be stoking concerns about inflation, and is likely to prove favourable for gold in the coming sessions," James Moore, analyst at TheBullionDesk.com, wrote in a daily note.
Gold prices often move in the same direction as oil, as the yellow metal is considered by investors as a hedge against oil-led inflation. Looking forward, Hunter said he expected gold trading would continue to be volatile. "But certainly, the market is shifting back its outlook to higher prices for the remainder of the year, and that trend remains intact," Hunter added.
Speculators in US gold futures raised their net long positions by 19 percent in the week to January 30 as prices soared to 5-1/2 month highs, the Commodity Futures Trading Commission said in its latest Commitment of Traders report.
AngloGold Ashanti said on Monday one pit at its Geita gold mine had been hit by a partial slope failure, which would delay access to high-grade ore bodies the company had hoped would boost production. The mine's other three pits were unaffected so output was expected to continue at the same rates seen in 2006, AngloGold said.
Polyus Gold, Russia's largest gold miner, said it raised 2006 output 17 percent to 1.215 million ounces on higher production from its main Olimpiada mine and an acquisition.
Canadian investors can now hitch their retirement money to the price of gold with a product offered by bullion dealer Kitco Metals Inc that lets them buy and sell gold coins and bars in their tax-deferred retirement savings accounts. Spot gold was quoted at $649.00/9.70 an ounce, compared with $647.00/7.70 traded late Friday. London's afternoon gold fix was $649.40.
Comex March silver finished up 18.5 cents, or 1.4 percent, at $13.560 an ounce, traded in a range between $13.330 and $13.590. Spot silver rose to $13.470/3.520, above its late Friday quote of $13.350/13.400. Silver was fixed in London at $13.290 an ounce.
NYMEX April platinum closed up $8.20 at $1,171.70 an ounce. Spot platinum fetched $1,165.00/70.00. NYMEX March palladium ended $4.10 higher at $342.35 an ounce. Spot palladium was quoted at $337/341.00.