SAN FRANCISCO (MarketWatch) — Gold futures gained Wednesday, drawing
strength from safe-haven buying as investors remained concerned about
Iran.
Gold for February delivery rose $10.80, or 0.7%, to $1,611.40 an ounce
on the Comex division of the New York Mercantile Exchange.
The metal earlier veered between small gains and losses, but gathered steam as U.S. stocks started their trading day.
Gold ended Tuesday 2.2% higher, at its best in more than a week at
$1,600.50 an ounce as the dollar lost against major rivals, and oil and
U.S. equities rallied.
The psychology of gold
The University College London professor discusses with Rhiannon Hoyle the underlying psychological factors that draw us to gold, even at near-record high prices, and how the metal's long history, and association with wealth and beauty, plays on our emotions.
In recent months, gold has broadly traded in tandem with other
commodities and stocks, losing most of its allure as a safe haven.
On Tuesday, however, part of its strong showing came from investor
concern about Iran’s war rhetoric and threats to disrupt oil shipping
lanes in the Strait of Hormuz as well as news it had successfully made
and tested nuclear fuel rods as the country continues to defy Western
powers in face of sanctions.
Gold prices are expected to trade in a tight band between $1,570 and
$1,620 an ounce, analysts at India’s ICICI Bank said in a note to
clients Wednesday.
Indian gold imports last year fell short of market expectations, raising
more than a few eyebrows as India is one of the world’s top consumers
of gold.
Demand for gold in India “is likely to be relatively muted this year
too, and should remain at roughly the 2011 level,” analysts at
Commerzbank said in a note to clients.
Last year, however, central-bank purchases “more than made up” for the
weak Indian demand, and central banks are expected to keep expanding
gold reserves this year as well, keeping gold prices well supported, the
analysts added.
Other metals futures traded lower, leaving behind the previous session’s
steep gains, fueled in part by optimism surrounding U.S. manufacturing
activity as Tuesday’s Institute for Supply Management index rose more
than expected in December.
March silver
SI2H
-1.06%
, which ended Tuesday up 5.9%, traded 32 cents lower, or 1%, at $29.28 an ounce.
Copper for the same month’s delivery
HG2H
-2.17%
declined 5 cents, or 1.3%, to $3.48 a pound. Copper ended the previous session up 2.7%.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
