Copper contract falls as silver stages early rally
Gold futures rose Tuesday, carrying over gains from the prior session, as news that the government may order 10 banks to boost capital levels fueled fresh financial worries, increasing gold's appeal as a safe asset.
Meanwhile, copper futures traded down for the first session in five.
Gold for June delivery climbed nearly 1%, adding $8.60 to stand at $910.80 an ounce on the Comex division of the New York Mercantile Exchange. The benchmark contract has risen 2.5% this week.
Helping set the trading tone in metals, U.S. officials are expected to direct about 10 of the 19 banks undergoing government stress tests to boost capital.
The exact number of banks affected remains under discussion, The Wall Street Journal reported, though possible candidates for capital raising could include Wells Fargo & Co. , Bank of America Corp., Citigroup Inc.and several regional banks. See full story.
Its recent gains notwithstanding, "gold is still struggling to conquer trend-line resistance, and, with momentum indicators showing signs of stalling, the metal remains at risk of testing back to the $865 area," said James Moore, analyst at TheBullionDesk.com.
Metals traders also keyed on the Institute of Supply Management's latest survey of nonmanufacturing businesses as well as Federal Reserve chief Ben Bernanke's testimony before Congress on the economy.
Investment inflows in gold exchange-traded funds remained largely unchanged. Holdings in the SPDR Gold Trust stood at 1,104.45 tons on Monday, unchanged for an eighth session, according to the latest data from the fund.
The price of the SPDR Gold Trust, the biggest gold exchange-traded fund, gained 0.9% to $89.46 Tuesday.
In other metals dealings Tuesday, July silver rose 36.2 cents, or 2.8%, to $13.475 an ounce. June palladium gained 75 cents, or 0.3%, to $223.05 an ounce, as the July contract for sister metal platinum added $15, or 1.3%, to $1,137 an ounce.
Copper for July delivery fell 3.3 cents to $2.111 a pound, shedding 1.5%. Copper had rallied 12% in the past four sessions on continued declines in inventories in the London Metal Exchange.
LME copper inventories fell below 400,000 tons on Friday -- down more than 100,000 tons, or 21%, from a month ago, according to the exchange's latest data.
