Gold extended gains on Tuesday, adding to a rise of nearly 2% in New York, helped by bargain hunting and record-high crude oil, which enhanced the metal’s appeal as a hedge against inflation.
Bullion’s fall to a four-month low last week also spurred buying from the physical sector, especially in main consumer India ahead of a religious festival. But gold was still trading well below a record of $1,030.80 an ounce hit on March 17.
Gold rose to to $876.45/877.45 an ounce from $871.15/872.55 late in New York on Monday, moving some way above Friday’s four-month low of $845 an ounce. Gold’s gains offered support to silver, platinum and palladium. “Physical demand could provide necessary support and evade a major sell-off at least until the middle of the week, considering the expected buying spree from Indian physical markets,” said Pradeep Unni, an analyst at Vision Commodities Services in Dubai. “The current week is quite critical for gold and may serve as the trendsetter for the weeks ahead,” said Unni, who pegged resistance level at $888. Dealers reported buying interest from jewelers and bargain hunters in the Middle East, Indonesia and Thailand. Crude oil hit another record at $120.68 a barrel on the back of a weaker dollar and supply concerns in Iran and Nigeria.
Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $4.1 an ounce to $878.2 an ounce. Tokyo precious metal markets were closed for a holiday. “There’s a combination of physical buying and short-covering at the lows, but I think the market will still be in a range of $850 to $880 for the time being,” said a dealer in Hong Kong. “Holdings on the ETF seem to be dropping a lot, so I don’t know what people really think about the market right now,” he said.
Gold bars were quoted at a premium of 30 cents an ounce to the spot London prices in Hong Kong, steady from last week. Gold held in StreetTRACKS Gold Shares, the world’s largest gold-backed exchange-traded fund, was unchanged at 580.45 tons but down from a record of 663.83 tons in mid-March. (Reuters)