MW: Gold futures gain more than $12 for the session
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures pulled back from near a two-week high Monday but still closed more than $12 up as China's $586 billion economic-stimulus package helped fuel gains among most commodities.
"The worst of the sell-off appears [to be] behind us as, even after the recent gains, we remain oversold and any further falls are likely to be short and shallow," said Mark O'Byrne, a director at Gold & Silver Investments Ltd.
"Gold will likely surprise many by recovering its recent sharp losses as quickly as they were incurred, and we could see gold above $800 again well before the end of November," he said in emailed comments.
Gold for December delivery climbed $12.30, or 1.7%, to close at $746.50 an ounce on the Comex division of the New York Mercantile Exchange.
It tapped a high of $768.90 in electronic trading on Globex, the strongest intraday level since Oct. 29.
The benchmark gold contract gained 2.2% last week.
China unveiled what it described as a "massive" stimulus package Sunday in an effort to reverse slowing economic growth in the world's most populous country. See full story.
But "while gold is up again today along with equities and commodities on news of the huge $600 billion Chinese stimulus package, gold's gains ... are more likely to be a continuation of the risk aversion that saw gold rise 2% last week (when most other markets were down) rather than being related directly to the Chinese stimulus package," said O'Byrne.
He believes that "although unprecedented, stimulus packages and money printing by governments internationally is likely to lead to inflation and higher interest rates in the long term."
Consolidation time
For now, gold's consolidation between $700 and $760 will likely continue, but "the path of least resistance for the gold market is to the upside -- especially as market and economic conditions look set to worsen in the coming weeks, resulting in more safe-haven demand," said O'Byrne.
Meanwhile, China's stimulus program undercut the Japanese yen and U.S. dollar in foreign-exchange trading Monday. See Currencies.
But prices for most commodities moved higher, with natural gas futures climbing 7.3% and crude futures up 2.2%. See Futures Movers.
In other metals trading, December silver rose 2.6% to close at $10.22 an ounce, December copper added 3.2% to end at $1.752 a pound, and January platinum rose 0.9% to close at $859.90 an ounce.
But December palladium finished at $222 an ounce, down 0.9%.
In equities trading, the Amex Gold Bugs Index which tracks the share prices of major gold companies, climbed 4.7% to close at 210.53.
The iShares Gold Trust tacked on 1.6% to end at $73.75, while the iShares Silver Trust ETF added 1.2% to close at $10.06. The Market Vectors-Gold Miners ETF rallied 6.3% to finish at $23.13.
