MW: Gold rises as investors brace for earnings season
Gold futures rose Tuesday, bouncing back from their sharp losses in the previous three sessions, with investors growing nervous as quarterly results and outlooks from corporate America are expected to start pouring in.
Investors seeking safety often turn to gold. The precious metal's gains, however, were also limited by a stronger dollar, which increases cost appeal of dollar-denominated commodities, such as gold.
Gold for April delivery rose $4.30, or 0.5%, to $875.80 an ounce in early North American electronic trading. It had lost 6% in the previous three sessions to wipe out their yearly gains. At Monday's close, gold's down 1.4% for the year.
"Bargain hunters are lifting gold prices," said James Moore, a precious metals analyst at TheBullionDesk.com. "However the metal is still at risk to further pressure short-term and could look to challenge the $845 to $850 area."
Gold prices have come under selling pressure last week, partly out of optimism that collective actions by leaders of the world's major nations may stem the global economic crisis.
But concerns over banks and the financial system were rekindled on Monday, just ahead of earnings season. Investors now await results from aluminum giant Alcoa Inc. , which kicks off the new earnings season after the close of trading Tuesday.
On Monday, gold prices fell. Possible gold sales by the International Monetary Fund helped depress prices, George Gero, a precious metals trader for RBC Capital Markets, said.
Gold is now about $130 lower than its February high above $1,000 an ounce.
Over the long term, however, the IMF's planned 403 tons sales are expected to have little impact in gold prices, as the sales will be implemented in coordination with major central banks.
The sales could also be "off market," said Hussein Allidina, an analyst at Morgan Stanley. The IMF, for example, could sell gold direct to countries with lower gold reserves such as China and Russia. See full story on IMF gold sales.
Investment in gold exchange-traded funds also stalled recently. Holdings in SPDR Gold Shares , the biggest gold exchange-traded fund, stood at 1,127.37 tons Monday, unchanged from a day ago, according to latest data from the fund.
Investors were awaiting Alcoa Inc. to kick off the new earnings season after the close of trading Tuesday. Analysts polled by FactSet Research are looking for Alcoa to post a loss, on average, of 50 cents a share with total revenue of $4.68 billion.
In currencies trading, the dollar was higher against most of its major rivals. A rising greenback tends to add downward pressures on dollar-denominated commodities prices.
In other metals futures, silver for May delivery rose 0.3% to $12.14 an ounce. June palladium was up 0.8% at $227.50 an ounce, while April platinum added 1.5% to $1,163.20 an ounce.
May copper rose 1.6% to $1.9905 a pound.
