Gold futures edged higher Tuesday after hitting 7-week low

Gold futures edged higher Tuesday, coming back from the previous session’s steep decline, as a lower dollar and higher U.S. equities, as well as some positive headlines out of Europe, provided support for prices.

Gold for February delivery   gained $9.70, or 0.6%, to $1,676.70 an ounce on the Comex division of the New York Mercantile Exchange.

On Monday, the contract for the precious metal tumbled $48.60, or 2.8%, to finish at its lowest level since Oct. 24, part of a broader market selloff.

“Gold is at a critical juncture,” said Robin Bhar, senior metals analyst at Credit Agricole.

Gold has behaved more like a commodity than a safe-haven investment for most of the second half of the year. With each passing headline about the euro zone’s sovereign-debt crisis, investors have flocked to the dollar or to U.S. Treasurys.

Boosting sentiment on Tuesday, however, the Spanish Treasury sold more short-term paper than it had planned at an auction, Europe’s bailout fund was able to sell bonds with positive demand, and a German gauge of economic sentiment broke a nine-month downward trend.

Gold’s performance “over the next few days could signal its next big move,” Bhar wrote in a note to clients.

“The approach of year-end and the need for [U.S. dollar] to meet funding commitments in an already heightened environment of stresses in the inter-bank lending markets continues to see gold under pressure,” the analyst added.

Bhar noted that, if sustained, the increased volume of lending against gold “could act to cap gold prices in the short-term as we witnessed last week, as rallies above $1,760/ounce were quickly capped.”

Other metals tracked gold higher in Tuesday’s dealings, with March silver  up 75 cents, or 2.4%, to $31.75 an ounce. March copper   added 2 cents, or 0.7%, to $3.49 a pound.

Some respite for metals came from a weaker U.S. dollar. The dollar index , which measures the greenback against a basket of six currencies, stood at 79.495, off from 79.533 late Monday.

A weaker U.S. unit is inherently beneficial to metals and other dollar-denominated commodities as it makes them cheaper for holders of other currencies.

The March contract for palladium  rose $4.75, or 0.7%, to $667.75 an ounce. January platinum advanced $11.30, or 0.8%, to $1,489.60 an ounce. – MarketWatch

Posted by admin on Dec 13 2011. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry