RTRS: Gold rises on better risk appetite, commodity gains
NEW YORK -- Gold rose Tuesday, snapping a two-session losing streak, as a recovery in risk appetite and better economic sentiment lifted the commodities led by oil after last week’s sell-off.
Improved U.S. corporate results led by banks like Goldman Sachs Group Inc and Citigroup Inc prompted funds to buy assets perceived as riskier such as equities and commodities.
“Gold just trades like a risk asset at the moment. It’s really hard to catch the moment where we start trading as a hedge against sovereign or currency risk,” said Andrey Kryuchenkov, analyst at VTB Capital. "The metal will in the near term take the lead from the euro/dollar, which has recently benefited from optimism about a bailout package on debdge against sovereign or currency risk."
Gold and the dollar usually move in opposite directions. Recently, however, the inverse link between the two has broken because of a flight to quality amid worries over Greece.
Spot gold was at US$1,139.25 an ounce at 2:41 p.m. EDT (1841 GMT), against US$1,134.60 late in New York on Monday.
U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange settled up US$3.40 at US$1,139.20 an ounce.
Gold prices ended 2% lower last week, sliding with other commodities after U.S. regulators charged Goldman Sachs with fraud Friday, prompting selling of assets seen as higher risk, including commodities and currencies like the euro.
U.S. stocks rose as energy shares advanced on higher oil prices and bellwether companies reported quarterly results, although some fell short of heightened expectations. Other commodities also recovered, with oil prices rising US$2 a barrel to US$83 as equity markets climbed. Base metals also rebounded.
“We still see some profit taking. A lot of people are just on the sideline and waiting to see what the next move is,” said Mihir Dange, a COMEX floor gold trader.
Mr/ Dange said that the price of gold is currently at a crossroad, whipsawing between further liquidation pressure and a positive technical trend.
“Technical signals are still fairly supportive for all precious metals. Momentum and trend ratings are still positive,” said Tobias Merath, head of research at Credit Suisse. “And we have seen the euro-dollar creeping higher.”
PALLADIUM HITS TWO-YEAR HIGH
Palladium was at US$547.50 an ounce against US$535.00, having earlier hit US$550.50, its highest since March 2008. Platinum was at US$1,713.50 an ounce against US$1,693.50.
The metals are supported by ETF demand, particularly from the United States.
“The palladium ETF launched in the United States at the start of the year recorded inflows of 30,000 ounces yesterday, increasing its stocks to 670,000 ounces,” Commerzbank said. “The fund... accounts for over 10% of annual global demand and is already larger than its European counterpart.”
