Gold prices gain over 1% on bargain hunting, post weekly gain
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Gold prices gain over 1% on bargain hunting, post weekly gain

Last Updated: Saturday, December 14, 2013, 18:18
 
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Gold prices gain over 1% on bargain hunting, post weekly gain
London/New York: Gold rose 1 percent on Friday, helped by bargain-hunting after a sharp two-day plunge, but analysts said the market remains vulnerable to the downside ahead of the all-important Federal Reserve policy meeting next week.

For the week, gold was up almost 1 percent on a lower dollar and heavy short-covering earlier in the week.

Stronger-than-expected U.S. retail sales numbers on Thursday, adding to last week`s forecast-beating jobs report, strengthened speculation the Fed could start winding down its bond purchases at its December 17-18 meeting.

Adding to the rosier economic picture was news that U.S. lawmakers had struck a tentative budget deal that would avoid a government shutdown in January.

"The data, as well as the budget deal, have been modestly encouraging, and it shifted opinion back towards tapering in December," said HSBC chief precious metals analyst James Steel.

"We had a big decline yesterday and this is really a round of short-covering going on right now," Steel said of gold.

Spot gold climbed 1.1 percent to $1,237 an ounce by 3:22 p.m. EST (2022 GMT). U.S. gold futures for February delivery settled up $9.70 at $1,234.60, with trading volume about 40 percent below its 30-day average, preliminary Reuters data showed.

Gold is headed for a 26 percent decline this year, its first annual decline since 2000. Investors, encouraged by a recovering global economy, pulled money from gold and channeled it into riskier assets such as equities.

Holdings in SPDR Gold Trust, the biggest gold ETF, fell the most in nearly two months on Thursday. The fund has not seen inflows in more than a month, hinting that a substantial upside in prices is limited, traders said.

Silver took its cue from gold, rising 1.1 percent to $19.67 an ounce.

Platinum group metals largely ignored news that South Africa`s National Union of Mineworkers (NUM) said on Thursday it had agreed a two-year wage deal for pay increases of 7.5 to 8.5 percent with Anglo American Platinum , the world`s top producer of the precious metal.


Reuters

First Published: Saturday, December 14, 2013, 09:42


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