MW: Gold rises on cautiousness over earnings, economy
Gold futures rose Monday, bouncing back from big losses in the previous two sessions, as investor cautiousness over first-quarter earnings at Bank of America and some of its peers heightened the metal's appeal as a safe asset.
Bargain hunters also stepped in. The benchmark gold contract lost nearly 3% in the past two sessions to move below $870 an ounce, while slumping crude-oil prices and falling U.S. stocks also burnished gold's investment appeal.
Gold for June delivery rose $11.10, or 1.3%, to stand at $879 an ounce in early North American electronic trading.
Gold moved higher "as financial fears returned," said George Gero, a precious-metals trader for RBC Capital Markets.
On Wall Street, stocks opened sharply lower, giving up a portion of the substantial gains made over the prior six weeks, with traders taking profits off the table as Bank of America kicked off an extremely busy week for reporting quarterly financial results.
Although Bank of America's results came in better than expected, concerns about the banks remained firmly in place after a Wall Street Journal report that banks receiving government money were lending less and less.
Investors were also awaiting earnings reports from bellwether tech companies such as International Business Machines and Texas Instruments .
In energy trading, crude futures slumped more than 6% to below $48 a barrel on economic concerns and recurring demand worries. The nation's crude inventories have risen to their highest level in nearly two decades, the U.S. government reported last week. See Futures Movers.
Investors buy gold to protect their portfolio when other the value of assets, such as stocks and crude, falls. But some analysts remained cautious on gold prices.
Gold's declines "has been prevented from further weakness by bargain hunters as well as physical jewelry interest," said James Moore, an analyst at TheBullionDesk.com. But "gold is likely to be at risk to further pressure short-term, particularly with more ETF redemptions expected."
"The metal may test down to the $820 area before finding sufficient support," he added.
Holdings in SPDR Gold Shares, the biggest exchange-traded fund backed by gold, fell to 1,105.98 tons Friday, down 13.45 tons, or 1.2%, from the prior day, according to the fund's latest data.
SPDR rose 1% to $86.06 on Monday.
As for the other metals, silver for May delivery gained 28.5 cents, or 2.4%, to $12.075 an ounce. June palladium was up 65 cents, or 0.3%, at $234.20 an ounce, while July platinum gave up $23.40, or 1.9%, to $1,188.20 an ounce.
Bucking the trend, May copper gave up 6.8 cents, or 3.1%, to $2.126 a pound.
