FS: Gold futures extend gains as oil prices rebound
Futures Pros – Gold futures were up for the first time in three days on Wednesday, recouping some of the previous day’s losses amid bargain buying and as energy prices rebounded, rekindling concerns over inflation.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,460.05 a troy ounce during U.S. morning trade, gaining 0.48%.
It earlier rose to a daily high of USD1,463.35 a troy ounce.
On Tuesday, gold prices fell to a one-week low of USD1,443.95 a troy ounce after oil prices tumbled and Goldman Sachs advised investors to “lock-in trading profits before the commodity market reverses”.
The price drop sparked some bargain buying from traders reluctant to bet that prices would fall further.
Meanwhile, oil prices rebounded amid worsening violence in Libya. The country’s rebel-led Interim Transitional National Council called for the United Nations to declare Misrata an “internationally protected zone” and urged the use of “all necessary measures”, after pro-Gaddafi forces accelerated attacks in recent days.
Investors often buy gold as a refuge against economic and political uncertainty and as a hedge against inflation.
London-based industry research group GFMS Limited said in its widely-anticipated 2011 Gold Survey that it expected gold prices to climb to USD1,600 an ounce in 2011, as investors boost demand for the metal as a hedge against inflation.
According to the report, total gold demand rose 0.4% in 2010 to 4,334 metric tons, the third straight annul gain. Demand for physical gold bars surged by 66% to a record 880.5 tons, led by purchases from China.
Central banks bought 73 tons of gold last year, halting a two-decade trend of reducing their gold reserves.
GFMS Executive Chairman Philip Klapwijk said, “The prospects for gold prices this year remain bright. Investors continue to be concerned about the outlook for inflation, with governments in general showing little appetite to tighten monetary policy significantly.”
Elsewhere, silver for May delivery jumped 1% to hit USD40.43 a troy ounce, while copper for May delivery slumped 1.05% to trade at USD4.335 a pound during U.S. morning trade.
