Forexpros – Gold bulls received an end of year gift as futures bounced off lows Friday, on speculation that the five month slump will attract buyers from end users and investors.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1570.95 a troy ounce during mid London trade surging 1.96%
It earlier hit a high of USD1575.05.
Gold futures were likely to find short term support at USD1568.61 and intraday technical resistance exists at USD1574.31.
A report from India indicated that jewelry demand from the world’s largest gold buying nation soared 12% in 2011’s first quarter, sparking the speculative bullish bounce.
The yellow metal broke a six session losing streak, the longest since March 2009.
Marc Ground of Standard Bank downplayed the bounce to Bloomberg, “January and February are usually good months in India, and a lower gold price might attract some buyers. While we haven’t seen physical demand pick up yet, maybe some people are anticipating it for next year.”
The much anticipated Italian long term bond auction disappointed investors with yields posting at just under 7% sparking increased demand for the U.S. dollar thus pressuring gold lower earlier in the week.
For much of the last year, investor’s typical reaction to bad news from Europe was to buy gold, as its boosts safe haven appeal of the precious metal, but that relationship has unraveled recently. I
nstead, gold futures have moved largely in line with other commodities and risk assets over the past month, with investors preferring the relative safety of the U.S. dollar.
The dollar rose earlier to a 15-month high against the euro, while the dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was off by 0.02% to trade at 80.78.
Elsewhere on the Comex, silver for March delivery rebounded 2.60% to trade at USD28.02a troy ounce, while copper for March delivery bounced higher by 1.70% to trade at USD3.42 a pound.
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