MW: Gold reverses losses on perception it's oversold
NEW YORK (MarketWatch) -- Gold futures reversed losses Friday, gaining more than 3% on perception that the precious metal, losing more than $190 in the previous 11 sessions, has been oversold. Copper and other metals, however, were mostly lower.
Gold had fallen in 10 out of the past 11 sessions since Oct. 8 on fund liquidation and a stronger dollar. It dropped to $681 earlier Friday, the lowest level since September, 2007.
"Gold's sell-offs have been sharp and brutal and it is clearly very oversold," said Mark O'Byrne, executive director at Gold and Silver investment.
Gold for December delivery was last up $24.30, or 3.4%, at $739 an ounce on the Comex division of the New York Mercantile Exchange. Despite the gain, the metal is set to lose more than 8% this week.
Gold's earlier losses came amid sharp losses in global stock markets. Similarly, crude-oil futures slumped more than 4% as OPEC's production cuts failed to offset concerns that the global economic slowdown is dampening oil demand.
Gold is often seen as an investment safe haven for which prices tend to rise when the economy gets into trouble, but its recent slump has defied conventional wisdom. Analysts pointed to fund liquidation and a sharply rising U.S. dollar as major reasons for the drop in gold prices. See related story.
The metal is "still fighting the deleveraging holocaust but as soon as this alleviates, it has significant room to rally," said Peter Spina, president of GoldSeek.com. "The upside risks are considerably higher than downside risks."
In exchange-traded funds, gold in the SPDR Gold Trust, the largest gold ETF, stood at 747.06 tons Thursday, down 8.58 tons from the previous day, according to the latest data from the fund. Gold at SPDR hit a record high of 770.64 tons on Oct. 10.
The SPDR Gold Trust rose 2% to $72 on the New York Stock Exchange.
In spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $692.50 an ounce Friday morning local time, down $27.50 from Thursday afternoon.
Copper falls again
Elsewhere, December copper dropped 6.4% to $1.6885 a pound. It moved as low as $1.656 in earlier trade, the lowest level since September 2005.
The metal has dropped 44% so far this year, charging toward its biggest annual percentage drop since 1988, when trading data first became available on the Nymex.
Copper is heavily used in cars, homes and appliances, and is seen as an economic barometer. See Commodities Corner.
January platinum fell 2.2% to $794.60 an ounce. It dropped to $768.10, the lowest since November 2003. December palladium fell % to $171 an ounce.
December silver fell 6.7% to $8.865 an ounce. It traded at $8.65 earlier, the weakest since December 2005.
On the equities side, the Amex Gold Bugs Index surged 7.8% to 172.33 points. IShares Gold Trust rose 2.1% to $72.54, while the iShares Silver Trust ETF dropped 1% to $9.29.
The Market Vectors-Gold Miners ETF gained 5.5% to $18.42.
