MW: Gold rallies over 1%, extends gain to second day
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures rose Monday, tracking U.S. stocks as the metal continues to follow the lead of equities and other assets after safe-haven buying has dried up.
Gold for December delivery GC1Z +1.11% rose $18.40, or 1.1%, to $1,654.70 an ounce on the Comex division of the New York Mercantile Exchange.
Markets were cautiously optimistic European leaders will agree this week to a comprehensive plan to address the region’s debt crisis.
“There is currently a high correlation between (speculators) positioning on” Comex and gold price movements, analysts at Commerzbank said in a note to clients Monday.
Managed money has cooled to gold, and bets that gold prices will go higher are at the lowest since early May 2009, the analysts added.
Data released late Friday by the U.S. Commodity Futures Trading Commission showed managed funds cut their futures net long positions further in the week ended Oct. 18 to nearly 118,000 positions.
Other metals took gold’s lead, with December silver SI1Z +1.50% rising 38 cents, or 1.2%, to $31.56 an ounce. December copper HG1Z +4.90% added 14 cents, or 4.4%, to $3.37 a pound.
The much-awaited Sunday summit of European Union leaders arrived at no breakthroughs, but leaders repeated a pledge to come up with a far-ranging plan in time for another meeting on Wednesday. Read more about the European summit.
On the table are the possible writedowns for holders of Greek sovereign debt, a way to boost the European bailout fund, and a plan to recapitalize euro-zone banks.
On the physical side of gold, upcoming holidays in India, leading to Diwali next month, should provide a floor to prices. Certain Hindu holidays are considered particularly propitious occasions to buy and gift gold bullion and jewelry.
For the metals more closely linked to industrial uses, help on the physical side came from China, where a preliminary monthly survey of manufacturing conditions released by HSBC showed a rise to a five-month high.
HSBC’s “flash” China Manufacturing Purchasing Managers’ Index climbed to 51.1, up from 49.9 in September.
Among the survey’s key sub-components, manufacturing output rose to a six-month high of 51.7, from 50.3 in September, and above the 50 level dividing expansion from contraction. Read more about China PMI.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
