Gold price rallies 2%; bargain hunters shop around
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Gold price rallies 2%; bargain hunters shop around

Last Updated: Tuesday, January 07, 2014, 03:08
 
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Gold price rallies 2%; bargain hunters shop around
Washington: Gold futures jumped 2 percent on Thursday as bargain hunters resurfaced after prices plunged to a six-month low, but optimism over the global economic outlook and the imminent end of the U.S. Federal Reserve's monetary stimulus could cap gains.

Read more on Gold 2014 Outlook

Talks that Chinese buyers returned to buy gold also supported prices, but physical dealers attributed the rally to the thin market at the start of the new year. Cash gold tracked U.S. bullion futures higher, rising more than 1 percent.

U.S. gold for February hit a high of USD 1,227.20 an ounce and stood at USD 1.223.20 by 0401 GMT, up USD 20.90. The contract sank to USD 1,181.40 on December 31, its weakest since late June, as prospects for global economic recovery prompted investors to shift money into equities.

"The market is still thin. Some buying interest has then pushed up the market over USD 10," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "Sentiment wise, I would say this is only short covering."

Cash gold rose as high as USD 1,227.75 an ounce, and later stood at USD 1,224.10, up USD 18.81. It had dropped to USD 1,184.50 an ounce on Tuesday, its weakest since June 28.

Silver tracked gold higher and rallied more than 4 percent.

Gold plunged 28 percent in 2013, ending a 12-year bull run, after the Fed announced plans to unwind the ultra-loose monetary policy starting January 2014, tarnishing the metal's appeal as a hedge against inflation. Gold price was nearly $700 below a record hit in 2011.

"We've seen a sudden jump in prices, and I am not too sure why. But it could be some demand from China because they have been very quiet in the last one or two months," said a physical dealer in Singapore.

"They maybe taking the advantage of the low prices to buy. Indonesia is seller today because of the weak rupiah, and you would expect Thailand to do the same."

Premiums for gold bars in Singapore were little changed from last week at USD 1.30 to USD 1.50 an ounce to the spot London prices.

Premiums in Hong Kong were steady at between USD 1.80 and a high of USD 2 an ounce as dealers waited for fresh supplies from Europe.

China's net gold imports from Hong Kong fell 42 percent to to below 100 tonnes in November, reflecting a drop in demand from jewellers and retail investors after strong purchases in recent months.

China does not publish gold trade data. The numbers from Hong Kong - a main conduit for gold into China - give the best picture of the country's trade of the precious metal.

In other markets, Asian share markets endured mixed fortunes on Monday in the wake of disappointing data on Chinese manufacturing, while investors showed renewed appetite for commodities as the new year got underway.



Reuters

First Published: Thursday, January 02, 2014, 12:19


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