MW: Gold rises for second day on bank worries; copper falls
Gold futures rose Tuesday for a second day, as news that the government may order 10 banks to boost capital levels fueled fresh worries about the financial industry, increasing gold's appeal as a safe asset. Copper futures were down for the first session in five.
Gold for June delivery climbed $13.20, or 1.5%, to $915.40 an ounce on the Comex division of the New York Mercantile Exchange. It has risen nearly $30, or 3.1%, this week.
U.S. stock futures were indicating a lower open after news that U.S. officials are expected to direct about 10 of the 19 banks undergoing government stress tests to boost capital. The exact number of banks affected remains under discussion, The Wall Street Journal reported, though possible candidates for capital raising could include Wells Fargo & Co. , Bank of America Corp. , Citigroup Inc.and several regional banks.
"Buying interest lifted gold" as the stress-test results are believed to show more banks need additional capital to weather a deeper recession, said James Moore, an analyst at TheBullionDesk.com.
"However, gold is still struggling to conquer trend-line resistance, and, with momentum indicators showing signs of stalling, the metal remains at risk of testing back to the $865 area," he added.
Investors were also awaiting the Institute of Supply management's survey of nonmanufacturing businesses and Federal Reserve Chairman Ben Bernanke's testimony before Congress later Tuesday morning.
Investment inflows in gold exchange-traded funds remained largely unchanged. Holdings in the SPDR Gold Trust , the biggest gold ETF, stood at 1,104.45 tons Monday, unchanged for an eighth session, according to the latest data from the fund.
In other metals Tuesday, July silver rose 44.7 cents, or 3.4%, to $13.56 an ounce. June palladium gained $2.70, or 1.2%, to $225 an ounce, and July platinum added $15, or 1.3%, to $1,137 an ounce.
Copper for July delivery fell 3.3 cents, or 1.5%, to $2.111 a pound. Copper had rallied 12% in the past four sessions on continued declines in inventories in the London Metal Exchange.
LME copper inventories fell below 400,000 tons Friday, down more than 100,000 tons, or 21%, from a month ago, according to the exchange's latest data.
