MW: Gold, silver futures rally on Europe debt hopes
Hopes European debt crisis will be resolved rose
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold and silver futures surged Tuesday, rebounding from their recent slump as hopes rose for a resolution to the European debt crisis.
Gold for December delivery GC1Z +3.99% added $63.10, or 4%, to $1,657.90 an ounce on the Comex division of the New York Mercantile Exchange.
A close in the black would snap a four-day losing streak for gold, which declined more than 9% last week.
Silver futures posted even more dramatic gains, with the December contract SI1Z +8.74% rallying $2.87, or 9.6%, to $32.88 an ounce.
Silver closed in the red for the past three sessions, including an 18% loss on Friday.
Global equity markets rose on Tuesday, buoyed by reports that euro-zone officials are planning to boost the region’s bailout fund in an attempt to bring the sovereign-debt crisis under control. U.S. stocks opened higher.
“The rise in risk sentiment has also reduced the rush to generate cash, taking the pressure off the precious metals," said James Moore, an analyst at TheBullionDesk.com, in a note. However, gold “remains vulnerable to further bouts of liquidation,” he noted.
Investors sold metals holdings to have cash on hand to meet stock margins, concerned about a possible global liquidity crunch, sparking a selloff for gold and silver futures as well as other commodities.
“Further concerns about European finances and an increase in margin requirements on the futures exchanges pulled the rug from beneath the metals prices before they found a floor,” analysts at Goldcore said in a note to clients.
Gold’s Monday settlement was the lowest since late July. An increase in margin requirements late Friday also contributed to selling. Read more on Monday’s metals action.
Other metals tracked gold higher, with December copper HG1Z +5.07% up 18 cents, or 2%, to $3.46 a pound.
Gold and copper miner Freeport-McMoRan Copper & Gold Inc. FCX +6.01% rallied 5.5% on Tuesday, one of the top gainers on the S&P 500 SPX +2.27% .
