MW: Gold turns higher, set to extend winning streak
Strength in yen spurs gold buying Japan, says strategist
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures turned edged higher Tuesday morning, rebounding from an earlier decline with the metal poised to extend its winning streak to five sessions.
A stronger yen helped lure investors to the gold market, according to one strategist.
“We see no fundamental reasons this morning for strong gold, but we are beginning to see evidence of Japan probably increasing demand for gold, and some other banks may be buyers in order to add to the portfolio just in case Japan sells gold later this year to fund its rebuilding,” said Richard Hastings, a macro strategist at Global Hunter Securities.
Gold for April (GCJ11 1,426, -0.60, -0.04%) delivery rose $1.60 to $1,428 an ounce on the Comex division of the New York Mercantile Exchange.
Prices had earlier fallen to a low of $1,419.50 as concerns over the situations in Libya and Japan eased.
The contract has already gained $33.60, or 2.4%, over the past four sessions.
In foreign exchange trading, the yen strengthened further versus the U.S. dollar, with one dollar buying 80.99 yen, down from ¥81.05 late Monday in North American trading. Read the currencies column.
“We continue to believe brief spurts in yen strength persistently push gold higher — and in each spurt this morning, the stronger yen was indicated as a catalyst for higher gold,” said Hastings.
“It’s forex driven — in other words, gold is a currency in various hypothetical pairs — so dollar-yen strength converts into dollar-gold strength,” he explained.
Easing tensions over the situation in Libya had helped to dull gold’s investment appeal in early trading.
U.S. Defense Secretary Robert Gates told reporters in Moscow that he expects the pace of allied air attacks in Libya to slow down over the next few days. Read about Tuesday’s developments in Libya.
In Japan, work restarted to cool heavily damaged nuclear reactors at the Fukushima Daiichi power plant, despite some of the facilities releasing more emissions Tuesday. Read about the developments in Japan.
But overall, “the rise in tensions across the MENA [Middle East and North Africa] region, coupled with ongoing eurozone debt issues and strong physical demand for gold from Japan, will continue to limit price weakness with gold and silver to maintain their longer-term up-trends,” analysts at TheBullionDesk.com said in a note to clients.
In economic news, U.S. housing prices fell a seasonally adjusted 0.3% in January, the Federal Housing Finance Agency reported. Data for December was also revised down to a 1.0% drop from an originally reported decline of 0.3%. Read more about the housing data.
In other metals trading Tuesday, June palladium (PAM11 740.30, -2.00, -0.27%) added $1.15 to $743.45 an ounce, May silver (SIK11 3,628, +27.40, +0.76%) edged higher, up 39.4 cents to $36.40 an ounce and May copper (HGK11 431.20, +2.60, +0.61%) was up 1.5 cents at $4.301 a pound. April platinum (PLJ11 1,741, -3.90, -0.22%) declined by $3.90 to $1,741 an ounce.
