MW: Gold turns higher; analysts upbeat on long term
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures climbed Friday morning, after dropping by as much as $10 an ounce, finding support as traders continued to gauge the prospects for economic recovery after news that the U.S. economy sped up in the fourth quarter, but consumer sentiment in January declined.
In recent dealings, gold (GCJ11 1,328, +8.10, +0.61%) (GCJ11 1,328, +8.10, +0.61%) for February delivery tacked on $5.10 to $1,323.50 an ounce on the Comex division of the New York Mercantile Exchange. The contract traded as low as $1,307.70 earlier, the lowest level since September.
The Commerce Department on Friday said gross domestic product rose at a 3.2% annual rate in the fourth quarter, faster than the 2.6% pace seen during the interval spanning July, August and September. Economists had expected a stronger 3.5% growth rate, however. Read more about the GDP data.
Also Friday, a gauge of consumer sentiment dipped to 74.2 in January from 74.5 in December on concerns about rising food and fuel prices, according to poll results released Friday by Thomson Reuters and the University of Michigan. Read more about consumer sentiment.
“Gold and many other commodities are feeling some impact right now from nervous investors,” said Kevin Kerr, editor of Kerr Commodities Watch.
Gold would normally “flourish in this environment, but for now it is opting to still correct from the record highs we have seen,” he said.
Overall, however, gold will continue to find support from investors who have sought the safe haven of precious metals, with “the U.S. dollar is still crippled and the euro is not that much better,” said Kerr.
Silver (SIH11 2,742, +38.90, +1.44%) prices moved higher, with March silver was up 28.4 cents at $27.32 an ounce.
“Gold and silver have started the year under considerable pressure as investors question the need for ‘stores of value’ in what appears to be a reasonably benign investment environment,” said strategists at Deutsche Bank in a research note issued Friday.
“We believe debt levels remain a key challenge globally, and could continue to create heightened risk perceptions over the course of 2011,” they said. “We remain positive on the complex.”
In other metals trading Friday, March copper (HGH11 438.15, +4.30, +0.99%) tacked on 5.7 cents to $4.40 a pound, April platinum (PLJ11 1,806, +2.30, +0.13%) fell $8.50 to $1,795 and March palladium (PAH11 813.15, -0.35, -0.04%) fell by $1.95 to $811.55.
