GOLD futures reclaimed $US1800 an ounce and silver rose above $US40 an ounce as investors saw a bargain in both metals’ drop to multi-week lows in the previous session.
Gold and silver continued to draw support as investors remain cautious on the outlook for Europe’s debt crisis and the Federal Reserve’s policy committee meeting this week.
Some investors turn to precious metals when the outlook for other assets is grim, and turmoil in global markets in recent months has kept a floor under prices for both metals.
The most actively traded gold contract, for December delivery, rose $US30.20, or 1.7 per cent, to $US1809.10 a troy ounce on the Comex division of the New York Mercantile Exchange.
“The market is very well supported under $US1800,” said Zachary Oxman, managing director with TrendMax futures.
Gold fell in the previous session to its lowest level in more than three weeks as worries that Greece would be unable to stave off a default hit global stockmarkets. Traders sold gold, one of the best performing assets this year, to raise cash to cover those losses.
Despite gold’s recent struggles, some investors see further gains for the metal. September is historically a strong month for gold, underpinned by physical buying from retailers and consumers.
“People are still talking about $US2000 an ounce,” said Jimmy Tintle, a broker with Transworld Futures. “You’ve got a seasonal move higher.”
Silver for December delivery rose 2.5 per cent to $US40.137 a troy ounce.
Philip Newman, a research director at metals consultancy GFMS, a unit of Thomson Reuters, said investment demand for silver was starting to pick up as investors grow more comfortable with the market following steep declines in May.
“Investors are now starting to reappear,” he said at a London Bullion Market Association conference in Montreal. “Albeit more cautiously.”
Mr Newman said investment demand for silver should reach a record of more than $US10 billion this year.
Traders are likely to turn their focus tomorrow to the policy statement following the conclusion of the Federal Open Market Committee’s two-day meeting.
Further steps toward accommodative monetary policy by the US central bank would likely boost gold in the long term, market participants say. The easy-money stance of central banks in the US and Europe has been a driver of gold’s rise, as investors bet that the increased liquidity in financial markets would hit the value of the world’s major currencies.
In the short term, however, stimulative action by the Federal Reserve could spark a rally in perceived risky assets, dampening demand for gold as a safe haven.
