MW: Gold rises as Alcoa stokes earnings fear, stocks fall
Gold futures rose for a second session on Wednesday as a worse-than-expected quarterly loss and sales from aluminum giant Alcoa Inc. fueled concern about corporate and economic woes.
Gold for April delivery rose $1.50, or 0.2%, to $883.70 an ounce in early North American electronic trading. Bargain hunters also entered the market after gold slumped 6% in three sessions ended Monday.
Mounting optimism about banks and the economy in March pressured gold prices, as investors embraced more risk.
But in recent sessions, gold is "in a continued upward move as more bargain hunting ensues," said George Gero, a precious metals trader for RBC Capital Markets. Falling stock markets were also helping gold, he added.
In gold exchange-traded funds, holdings in SPDR Gold Shares , the biggest gold exchange-traded fund, stood at 1,127.37 tons Tuesday, unchanged for a third session, according to latest data from the fund.
U.S. stock futures were mostly lower on Wednesday after Alcoa's earnings report, though insurers rose on hopes for government assistance and builders advanced after an industry merger.
Alcoa, the world's largest aluminum producer, kicked off the earnings season late Tuesday by reporting a first-quarter net loss of $497 million, or 61 cents a share, a reversal from a profit of $303 million, or 37 cents a share, generated during the first three months of 2008. See full story.
Alcoa's disappointing earnings increased worries over corporations' first quarter results. Earnings of S&P 500 companies are expected to decline by 36.7% from a year ago, according to Thomson Reuters.
Earnings-related nervousness could help strengthen gold's appeal as a safe haven, said James Moore, a precious metals analyst at TheBullionDesk.com.
"But with SPDR holdings unchanged for the third consecutive day the yellow metal may have to test lower to encourage sizeable investment flows," he added.
Despite the two days' gain, gold is still more than $120 lower than its February high above $1,000.
In other metals futures, silver for May delivery rose 1.5% to $12.395 an ounce. June palladium was up 2.6% at $231.95 an ounce, while July platinum gained 1.4% to $1,190.90 an ounce.
May copper rose 0.4% to $1.9975 a pound.
