Forexpros – Gold shot upwards Friday in a rally fueled by demand from bottom-fishing investors who viewed the precious metal as somewhat oversold.
A weaker dollar helped also, as the two assets often trade inversely from one another.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1568.75 a troy ounce, up 1.81%
The yellow metal earlier hit a high of USD1582.65 and a low of 1546.25.
Gold futures were likely test support at USD1523.95, Thursday’s low, and resistance at USD1594.25, Wednesday’s high.
The dollar has resumed its traditional role as a safe haven from market volatility during the latter half of 2011.
Loose monetary policies and economic uncertainty weakened the greenback before, which made gold a safe haven during the past year, especially amid concerns that inflationary pressures could rise.
Lately, however, investors have run back to the dollar on fears that the European crisis may be getting worse.
“We need to see the hot money from speculators, we need to see real money from the money managers coming back to this market, they have been absent throughout December,” said Saxo Bank senior manager Ole Hansen, according to Reuters.
The weaker dollar was the main reason for gold’s gains on Friday.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.34% to hit 80.53.
“That is really where it’s coming from,” Hansen said.
Elsewhere on the Comex, silver for March delivery rebounded 2.26% to trade at USD27.932 a troy ounce, while copper for March delivery rose 1.80% to trade at USD3.431 a pound.
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