By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures gained Wednesday, drawing strength from safe-haven buying as investors remained concerned about Iran.
Gold for February delivery rose $10.80, or 0.7%, to $1,611.40 an ounce on the Comex division of the New York Mercantile Exchange.
The metal earlier veered between small gains and losses, but gathered steam as U.S. stocks started their trading day.
Gold ended Tuesday 2.2% higher, at its best in more than a week at $1,600.50 an ounce as the dollar lost against major rivals, and oil and U.S. equities rallied.
In recent months, gold has broadly traded in tandem with other commodities and stocks, losing most of its allure as a safe haven.
On Tuesday, however, part of its strong showing came from investor concern about Iran’s war rhetoric and threats to disrupt oil shipping lanes in the Strait of Hormuz as well as news it had successfully made and tested nuclear fuel rods as the country continues to defy Western powers in face of sanctions.
Gold prices are expected to trade in a tight band between $1,570 and $1,620 an ounce, analysts at India’s ICICI Bank said in a note to clients Wednesday.
Indian gold imports last year fell short of market expectations, raising more than a few eyebrows as India is one of the world’s top consumers of gold.
Demand for gold in India “is likely to be relatively muted this year too, and should remain at roughly the 2011 level,” analysts at Commerzbank said in a note to clients.
Last year, however, central-bank purchases “more than made up” for the weak Indian demand, and central banks are expected to keep expanding gold reserves this year as well, keeping gold prices well supported, the analysts added.
Other metals futures traded lower, leaving behind the previous session’s steep gains, fueled in part by optimism surrounding U.S. manufacturing activity as Tuesday’s Institute for Supply Management index rose more than expected in December.
March silver SI2H -0.60% , which ended Tuesday up 5.9%, traded 32 cents lower, or 1%, at $29.28 an ounce.
Copper for the same month’s delivery HG2H -2.45% declined 5 cents, or 1.3%, to $3.48 a pound. Copper ended the previous session up 2.7%.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
