FT: Gold futures erase losses, hit 3-day high in choppy, holiday-thinned trade
Futures Pros – Gold futures erased losses to hit a 3-day high in volatile, holiday-thinned trade on Monday, as investors bought the precious metal after prices dropped earlier following China’s unexpected interest rate hike over the weekend.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD 1,383.75 a troy ounce during European morning trade, climbing 0.30%.
It earlier rose to USD 1,386.95 a troy ounce, the highest price since December 22.
Gold prices dropped to a daily low of USD 1,373.05 a troy ounce earlier in the day after the People’s Bank of China announced on Saturday that it raised its benchmark deposit and lending rates by 25 basis points for the second time since mid-October.
The widely expected move was aimed at curbing inflation, which surged to a 28-month high of 5.1% in November.
However gold prices recovered as investors bought the precious metal after prices dipped.
Global financial service provider Standard Bank said in a report earlier in the day that, “There seems to be quite good physical buying interest around USD 1,370 for gold. Those people waited for this chance and grabbed it.”
Meanwhile, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.22% during European morning trade.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Meanwhile, silver for March delivery slumped 0.16% to trade at USD 29.25 a troy ounce, while copper for March delivery gained 0.46% to trade at USD 4.279 a troy ounce during European morning trade.
Earlier in the day, copper for March delivery rose to a record high of USD 4.2985 a pound amid declining stockpiles in China, the world’s largest user.
