Gold up over $20, silver rallies after dismal 2013
San Francisco (Jan 2) Gold futures jumped by more than $20 an ounce while silver prices led percentage gains among the precious metals on Thursday amid reports of physical buyers looking for bargains after the metals suffered their worst year of trading in decades.
Gold for February delivery rose $21.50, or 1.8%, to $1,223.80 an ounce on the Comex division of the New York Mercantile Exchange, while silver for March delivery gained 70 cents, or 3.6%, to $20.07 an ounce.
Gold fell 28% for 2013 as a whole, while silver logged a 36% decline, measured by the continuous contract, and both performances were the worst since at least 1984, when FactSet began tracking data.
“Physical demand for gold is unquestionably supporting gold which had experienced heavy losses last year,” said Naeem Aslam, chief market analyst at AvaTrade.
Indeed, there were reports of bargain hunters stepping in to buy beaten-down gold and silver, notably Chinese buyers. The Lunar New Year falls at the end of this month, and the holiday often represents a strong period of gold buying by the Chinese.
“It is too early to call this a turn after we touched the double bottom of 2013 during the holidays, but the market is positioned short and technical traders will watch the charts closely,” said Peter Hug, global trading director at Kitco Metals Inc., in a note Thursday.
“A breach of $1,228, may cause program buying and a quick test of the $1,238 level would be in the cards. A drift to a lower close would indicate downside bias is still in play,” said Hug.
Gold prices climbed despite strengthening in the U.S. dollar, which tends to weigh on dollar-denominated commodity prices, but oil prices suffered sharp losses.
Data released Thursday showed a slowdown in China manufacturing growth, with export orders shrinking for the first time since August, according to the manufacturing Purchasing Managers’ Index compiled by HSBC and Markit. That news, which was more downbeat than economists had expected, weighed on Asia stocks.
In U.S. economic news on Thursday, weekly jobless claims fell to their lowest level in four months while the ISM index showed that U.S. manufacturing companies expanded at a slightly slower but still-healthy pace in December versus the prior month.
