Gold futures bounce off two-week low
San Francisco (Nov 4) Gold prices headed higher on Monday, with prices bouncing off a two-week low on the back of a weaker U.S. dollar and after St. Louis Fed President James Bullard said the central bank wasn’t in a rush to taper its bond-buying purchases.
Gold for December delivery rose $5.30, or 0.4%, to $1,318.50 an ounce on the Comex division of the New York Mercantile Exchange. December silver remained under some pressure, off 1 cent, or 0.1%, to $21.83 an ounce.
Gold futures closed Friday with a nearly 3% loss for the week, hitting their lowest level since mid-October as a rally in the U.S. dollar against the euro weighed on prices.
But on Monday, the dollar index weakened, helping to support prices for dollar-denominated commodities.
Monday also saw comments from the Fed’s Bullard helping to lift the metal. He said low inflation would allow the Fed to be patient before tapering its bond-buying purchases. But gains were held in check as Bullard also made comments that could be viewed as backing a move this year. He noted signs of improvement in the labor market, and said that the Fed could not wait until the U.S.’s main political parties worked out their differences over fiscal policy before tapering.
Traders are expected to remain focused on key economic gauges later this week, including nonfarm payrolls on Friday and preliminary data on third-quarter economic growth on Thursday, which could help firm up some views on when a taper move will come.
On Monday, prices for gold added to gains after data from the U.S. Commerce Department, which showed that factory orders in September jumped 1.7%. That had followed data on the Non-Manufacturing Purchasing Managers’ Index for China, among the world’s biggest gold buyers. The index showed a rise to 56.3 in October — the highest reading in 14 months.
Gold’s ‘fragile floor’
Despite any talk of a Fed tapering delay, the outlook is still tough for gold, said Suki Cooper and other commodities analysts at Barclays. She said several factors are setting a “fragile floor” for gold in the near term, such as dollar strength against the euro, an uptick in 10-year Treasurys, firmer equity markets and weaker-than-expected seasonal demand from India.
Commodity Futures Trading Commission data for the week revealed that investors pulled a further 6.5 tons of gold from exchange-traded-funds on Friday, meaning the selloff for gold continues and will weigh on prices in the short term, added analysts at Commerzbank in a note.
Still, some are buying gold, such as Keith McCullough, chief executive officer at Hedgeye Risk Management, who said he bought gold for the first time in more than a year on Friday. But he said to keep investing in gold he’d need to see the metal break out of its “bombed-out” base of $1,342 an ounce. He also lifted his commodities exposure 6% from zero.
Back on Comex Monday, January platinum added $2.70, or 0.2%, to $1,454.60 an ounce, while December palladium tacked on $7.65, or 1%, to $745.90 an ounce. December copper lost 4.5 cents, or 1.4%, to $3.25 a pound.
