Silver recoups much of Tuesday’s loss; copper contract rallies
By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures closed higher Wednesday as growing uncertainty surrounding Greece’s debt crisis helped the market score its first gain in four sessions.
Prices finished off the session’s high after a policy statement from the U.S. Federal Reserve offered no surprises The Fed repeated its intention to hold rates close to zero until mid-2013.
But trading in the regular session ended ahead of the Fed’s updated growth outlook and a press conference with Fed Chairman Ben Bernanke.
Gold for December delivery GC1Z +1.32% gained $17.80, or 1%, to settle at $1,729.60 an ounce on the Comex division of the New York Mercantile Exchange, pulling back after an earlier high of $1,745.60.
Futures prices had lost about $36 in the past three trading sessions.
The Federal Open Market Committee statement was “pretty much as I expected,” said Peter Grant, senior metals analyst at USAGold-Centennial Precious Metals Inc. “Gold remains generally well bid.”
“The market will be looking for clues of a more accommodative bent from Bernanke in the presser,” he said. “If they are forthcoming, we could see last week’s high [for gold] retested.”
The FOMC left its key interest rate at an historic low range of 0% to 0.25% where it has been since December 2008.
Dan Greenhaus, chief global strategist at BTIG LLC, pointed out that the Fed saw its first “dovish dissent” in about five years, with Charles Evans supporting additional policy accommodation at the Fed meeting.
“While much of November’s statement is identical to September’s, the FOMC is clearly inching towards easing further,” he said in a note.
Gold futures gained further ground in electronic trading, tacking on another $4 after the Fed sliced its growth outlook sharply for this year, 2012 and 2013. Attention now turns to Bernanke’s press conference. Read more about the Fed decision.
There are “lingering expectations of [a third round of quantitative easing], although I suspect that the October rally in stocks bought the Fed some time on that,” Grant said. “Perhaps some tweaking of the language, but I’m not expecting any additional quantitative measures to be revealed today.”
After the Fed news Wednesday, traders will then focus their attention to Group of 20 summit that starts Thursday and Friday’s U.S. payrolls report, he said.
Euro zone turmoil
For now, “gold continues to ride oscillating fear and relief in the euro zone,” Grant said.
Papandreou’s decision earlier this week to put the nation’s latest bailout plan to a public vote inflamed fears about a Greek sovereign-debt default. Read more about the latest Greek turmoil.
The announcement caught other euro-zone nations by surprise, prompting German Chancellor Angela Merkel and French President Nicolas Sarkozy to organize an emergency Wednesday meeting in Cannes, France, on the eve of a summit of the Group of 20 nations.
Reports Wednesday said Greece’s referendum could delay the nation’s next tranche of aid from the European Union and International Monetary Fund.
Against this backdrop, silver futures for December delivery SI1Z +4.21% added $1.21, or 3.7%, to end at $33.94 an ounce, after a 4.7% decline in the previous session.
December copper HG1Z +1.94% added 8 cents, or 2.2%, to $3.58 a pound.
January platinum PL2F +1.28% improved $19.30, or 1.2%, to $1,601.30 an ounce, while palladium PA1Z +1.92% for December delivery put on $13.65, or 2.2%, to $648.65 an ounce.
Also Wednesday, the dollar index DXY -0.35% , which tracks the performance of the greenback against a basket of rival currencies, fell to 77.106 from 77.298 late Tuesday, after trading as low as 76.706 earlier. A weaker greenback tends to support investment in dollar-priced commodities as it makes them less expensive to holders of other currencies. Read more on currencies.
Myra Saefong is a MarketWatch reporter based in San Francisco. Virginia Harrison is a MarketWatch reporter based in Sydney.
