Forexpros – Gold futures regained strength on Tuesday, as the biggest three-day drop since the 2008 financial crisis created buying opportunities for investors, while silver futures also posted strong gains.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,654.95 a troy ounce during late Asian trade, surging 3.91%, on track for its biggest one-day gain since March 2009.
It earlier rose as much as 4.15% to trade at a daily high of USD1,657.95 a troy ounce.
Gold prices tumbled nearly 14% in the past three trading sessions, as some investors sold the precious metal to raise cash and cover losses in other markets.
However, the sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further amid ongoing concerns over the euro zone’s sovereign debt crisis and worries over the global economic outlook.
On Monday, a senior European Central Bank policymaker said the funds in the EUR440 billion European Financial Stability Facility could be used as collateral to borrow from the ECB.
However, a key vote in the German parliament this Thursday must be approved before the EFSF’s role can be expanded.
Global financial service provider Commerzbank said in a report on Monday that gold traders were positioning themselves in the precious metal ahead of the EFSF votes, “in case there was a good outcome, which would lead to a sell-off in the dollar and rising risk appetite.”
Increased physical demand in India also supported prices, as consumers increased purchases of bullion ahead of the gold-buying wedding and festival season due to start in October.
Elsewhere on the Comex, silver for December delivery soared 6.07% to trade at USD31.79 a troy ounce, while copper for December delivery jumped 2.51% to trade at USD3.365 a pound.
Morgan Stanley attributed silver’s recent drop to “growing concerns about industrial usage” and the “high retail component of the investor base.”
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