By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Gold futures inched higher during Asian trading hours Wednesday, recovering a small portion of their losses in the previous day when the precious metal saw biggest drop in roughly six months.
Gold for February delivery traded at $1,382.80 an ounce in electronic trading on Wednesday, a gain of $3.80, or 0.3%.
On Tuesday, gold closed at $1,378.80 an ounce, a drop of $44.10, or 3.1% — its worst one-day performance since July — as investors shunned the metal amid optimism on the global economy. See story on gold slide.
Silver and copper futures also tumbled on Tuesday. But on Wednesday, benchmark silver futures edged up 18 cents at $29.68 an ounce, while copper futures declined 1 cent to $4.36 per pound.
“The main theme across markets in the past 24 hours has been a heavy unwinding/profit-taking on positions that had performed well over the last two weeks during holiday-thinned trading. Foremost in this regard are long commodity positions,” said analysts at RBC Capital Markets.
Gold surged 30% in 2010, repeatedly hitting fresh highs, while other metals also put in a strong performance.
Commodity strategists at MF Global said that they believe gold futures will continue to advance this year.
“Given the ongoing issues in Europe, coupled with concern about the Federal Reserve’s Quantitative Easing 2 program and the recent Obama tax compromise, we should see investor demand for gold remaining intact for most of 2011, as confidence in paper currencies continues to erode,” they said.
“Having said that, the complex could see its share of rather sharp setbacks, particularly if various crises force investors to seek the safety of the dollar,” the strategists said.
The greenback gained against the euro (EURUSD 1.3274, -0.0034, -0.2555%) and sterling (GBPUSD 1.5560, -0.0028, -0.1797%) on Wednesday, trading at $1.3285 against the euro and $1.5569 against the British pound. Against the Japanese yen, the U.S. dollar slipped less than 0.1% during Asian trading hours to change hands at ¥81.96.
