MW: Gold rises on cautiousness over earnings, economy
Gold futures rose Monday as stock markets and crude-oil futures slumped amid investor cautiousness over the economy and first-quarter earnings at Bank of America, which heightened the metal's appeal as a safe asset.
Bargain hunters also stepped in after the benchmark gold contract lost nearly 3% in the past two sessions to move below $870 an ounce, while a stronger dollar kept gold's gain limited.
Gold for June delivery rose $14.60, or 1.7%, to stand at $882.50 an ounce on the Comex division of the New York Mercantile Exchange.
Gold moved higher "as financial fears returned," said George Gero, a precious-metals trader for RBC Capital Markets. "Pessimistic outlook for securities brought recent lower gold [prices] within range of investment."
Fueling speculation that the economic crisis will linger, the Conference Board said Monday the recession may continue though the summer, though its intensity could ease. The index of leading economic indicators fell 0.3% in March.
On Wall Street, stocks fell sharply, giving up a portion of the substantial gains made over the prior six weeks, as Bank of America 1.62, -15.3%) 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 its Chairman and Chief Executive Ken Lewis warned that losses from souring loans will get worse rather than better. See full story on Bank of America.
Investors were also awaiting earnings reports from bellwether tech companies such as International Business Machines and Texas Instruments.
The dollar was higher against most major rivals. See Currencies.
In energy trading, crude futures slumped more than 8% to below $47 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 often 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 "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 down $3.60, or 1.5%, at $229.95 an ounce, while July platinum gave up $23.40, or 1.9%, to $1,188.20 an ounce.
May copper fell 6.8 cents, or 3.1%, to $2.126 a pound.
