By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Gold futures inched up during Asian trading hours Friday after recent declines and as the U.S. dollar weakened a little against the backdrop of an improvement in global stock markets.
February gold futures GC2G +0.21% added 0.2%, or $2.70, to $1,613.30 an ounce in electronic trading.
The front-month gold futures contract had declined Thursday on the Comex division of the New York Mercantile Exchange, extending a loss from the previous session. See report on Thursday’s gold trade.
James Steel, a bullion analyst at HSBC, said end-of-the-year portfolio adjustment by funds may have contributed to the recent declines in the precious metal, and that a further decline in gold holdings by exchange-traded funds may add downward pressure to prices.
However, recent action by the European Central Bank to provide a massive amount of loans to that region’s banks at cheap rates would prevent liquidity shortages and may be supportive of the euro, in turn likely aiding gold prices.
Expectations that the Chinese central bank may pursue a more accommodative monetary policy was also supportive of demand for gold, Steel said.
The increase in gold prices came as the dollar weakened a little against the euro and some other major currencies. The U.S. dollar index DXY -0.10% was at 79.822 in late morning hours in Hong Kong, compared with 79.929 in North America late Thursday.
Asian stocks rose, meanwhile, on the back of encouraging U.S. economic data. Read more on Asian markets.
March futures for other commodities in the metals complex also advanced on dollar weakness.
The monthly futures for silver SI2H +0.91% rose 0.7% to $29.26 an ounce, palladium PA2H +0.48% added 0.3% to $656.60 an ounce, and copper HG2H +0.86% gained 0.6% to $3.44 a pound.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
