Gold futures rise back above $1,700 an ounce on Tuesday

Gold futures rose Tuesday, rebounding as investors regained some appetite for the metal after a drop of nearly 3% in the previous session, to move back above $1,700 an ounce.

Gold for December delivery  added $23.10, or 1.4% to $1,701.70 an ounce on the Comex division of the New York Mercantile Exchange. It touched a high of $1,704.

The metal had closed out Monday’s session at a four-week low, dropping 2.7% to begin the holiday-shortened week as investors fled to cash on mounting worries about global debt and the uncertain economic outlook.

But on Tuesday, “bargain-hunting buying has come back into the market, providing a nice rebound that bodes well for gold’s near- and longer-term prospects,” said Brien Lundin, editor of Gold Newsletter.

The latest surrounding Europe’s sovereign-debt crisis as well as the congressional supercommittee’s failure to come to grips with the U.S. deficit will “add headline risk and volatility,” he said in an emailed. “But the only viable option left in either case is greater money creation, and this is the fundamental trend that will continue to drive metals prices higher.”

Some analysts, however, were downbeat about the outlook for gold prices.

“Given the uncertainties facing the euro zone, particularly with the [Moody’s Investors Service credit rating] downgrade threat facing France, the complex remains vulnerable to further pressure as traders continue to lock in profits and maintain sufficient cash liquidity,” said James Moore, London-based research analyst at Fast Markets, in a note.

For now, metal markets found some support in a weaker dollar, as the dollar index , which compares the greenback against a basket of six major currencies, fell to 78.195, from 78.315 late Monday.

The broader metals complex tracked gold higher, paced by silver.

Silver for December delivery    added 94 cents, or 3%, to $32.06 an ounce.

December copper  , the contract with the most volume, rose 4 cents, or 1.3%, to $3.35 a pound.

January platinum gained $19.20, or 1.2%, to $1,563 an ounce, and palladium for December delivery  added $6.65, or 1.1%, to $592.45 an ounce.  - MarketWatch

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Posted by admin on Nov 22 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