US gold futures rebounded early on Friday after the previous session's sharp losses, helped by buying following option expirations, a weaker dollar and recovering copper prices. At 9:46 am EDT (1346 GMT), most-active gold for June delivery on the COMEX division of the New York Mercantile Exchange was up $2.30 at $655.60 an ounce, trading between $653.30 and $656.90.
George Nickas at FC Stone said that gold bounced because of the relief of selling pressure after June gold options expired on Thursday. He said that gold futures could possibly retrace losses on Friday. "It should be going back up because the option writers were able to contain the underlying strength of the gold market (on Thursday.) Now, the overhead assistance should be very minimal," Nickas said.
Option expirations added volatility to the market because of the interaction of different trading strategies by investors. On Thursday, the June contract slumped to a 10-week low and finished down nearly $10 an ounce in heavy trade, as a rising dollar prompted funds and central banks to sell.
Larger-than-usual gold sales by central banks, especially by the European Central Bank, have recently weighed on gold prices. James Steel, analyst at HSBC, said in a note that the recent declines in precious metals, along with energies and base metals, indicated a broad investor flight out of the commodities sector, instead of bearish fundamental factors of any one commodity. "Gold and the other precious metals may continue to be weighed down for as long as the wide commodities complex remains weak, we expect," Steel said.
Spot gold was quoted at $654.90/6.40, versus $653.20/3.70 late Thursday. The London morning gold fix was set at $655.00. COMEX July silver was up 6.50 cents at $12.985 an ounce, trading from $12.895 to $13.035. Spot silver was quoted at $12.92/2.96, up from $12.82/2.85 on Thursday in New York. In London, silver was fixed at $12.925.
July platinum fell $14.50, or 1.1 percent, to $1,276.20 an ounce. Spot platinum was quoted at $1,271.00/1,276.00. June palladium dropped $4.90, or 1.3 percent, to $364.20 an ounce. Spot palladium fetched $364.00/368.00.