WSJ:PRECIOUS METALS: Gold Rises For Second Day As Dollar Rally Cools
-- Comex June gold up $12.60, or 0.8%, at $1,587.50 a troy ounce
-- Gold continues recovery from Wednesday's 10-month low
-- Fed minutes, factory activity spur whiff of QE speculation, draw bargain buyers
By Matt Day
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold futures prices Friday continued their rebound from this week's 10-month lows, as traders closed out bets on lower prices after the dollar's rally lost steam on some disappointing U.S. economic data and relative calm in Europe.
The most actively traded contract, for June delivery, was recently up $12.60, or 0.8%, at $1,587.50 a troy ounce on the Comex division of the New York Mercantile Exchange.
Futures settled at their lowest price in 10 months Wednesday, as political deadlock in Greece and strain in Europe's financial system sparked a rally in the dollar at the expense of precious metals. In recent months, Europe's sovereign debt crisis has stoked demand for U.S. government debt and the dollar, making dollar-denominated gold appear more expensive for buyers using other currencies.
But the market's ability to hold above its late-December intraday lows was taken as a signal that the selling was petering out, pushed some traders to close out bets against lower prices. The dollar, a headwind to gold as it climbed this week to the highest levels since January against the euro, paused Friday, easing the pressure on gold.
"The resilient [gold] market once again proved that major selling brings bargain hunting," said George Gero, a vice president and precious metals strategist with RBC Capital Markets, in a note.
Other investors moved into gold Thursday and Friday on the view that signs of weakening U.S. growth could push the Federal Reserve to take new steps to ease monetary policy, potentially making gold more attractive as an alternative to paper currencies.
A disappointing reading on mid-Atlantic factory activity Thursday, and this week's release of Federal Reserve meeting minutes showing some policymakers suggesting that more stimulus may be necessary if the economy worsens, both stoked speculation that a gold-friendly round of quantitative easing may be more likely now than it was a few weeks ago.
"With the prospect that growth may ease in the short-term, concerns of further quantitative easing may be gold-positive," said James Steel, an analyst with HSBC, in a note.
