Bearish sentiment toward the dollar and chart-based buying boosted US gold futures to a 13-month high on Tuesday, extending solid gains from last week, and the market is expected to benefit from further market turmoil as credit fears persist, dealers said.
Most-active December gold on the Comex division of the New York Mercantile Exchange settled up $8.90, or 1.2 percent, at $721.10 an ounce. Gold futures gained nearly $30 last week, largely driven by losses in the dollar. On Friday, gold futures finished at their highest levels since May following a bleak US jobs report, despite a near 300-point loss in the US benchmark Dow Jones industrial average.
"Gold, for the last couple of weeks, has broken away from the Dow and is trading on its own," Joseph Gizzard of Saibu Commodities said from the Comex floor in New York.
The current level was nearly 50 tonnes higher compared with a month. Comex estimated final volume at a modest 104,970 contracts, and gold options at 16,484 lots. Turnover at Chicago Board of Trade's electronic 100-oz gold futures were 25,894 lots at 2:21 pm.
In official gold sales, the European Central Bank said on Tuesday that gold and gold receivables held by euro zone central banks fell by 60 million euros to 171.94 billion euros in the week ending September 7.
Gold holdings fell because of sales by two euro zone central banks, and this was consistent with the 2004 Central Bank Gold Agreement, the ECB said. At 2:30 pm EDT (1830 GMT), spot gold was quoted at $711.90/712.50, sharply above the $703.30/704.1070 an ounce registered late on Monday.
The London gold fix was set at $704.15. Comex December silver finished up 13.5 cents, or 1.1 percent, at $12.835 an ounce, dealing between $12.635 and $12.950. Spot silver traded at $12.66/12.71 an ounce, up from $12.53/12.58 late on Monday.
London silver was fixed at $12.57 per ounce. Nymex October platinum closed up $8.60 at $1,302.60 an ounce. Spot platinum was quoted at $1,298.50/1,305.50. December palladium ended up $2.65 at $338.90 an ounce. Spot palladium was at $332/336.