Good Start to the Week for Gold, but Uncertainty Reigns

Source:

"I don't think investors are building new longs actively now after seeing sharp declines in recent trading," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo.

Gold jumped almost 2 percent yesterday, lifted by a broad rally across the commodities spectrum on hopes that a U.S. bailout of top mortgage lenders would encourage investors to return to riskier assets.

Despite gold's claim to be the ultimate safe haven, investors appeared to be lumping it into the same pool as metals and oil, the latter of which also surged ahead as Hurricane Ike barrelled across Cuba towards the Gulf of Mexico.

..."A sharp rise in crude oil and the euro's rise (against the dollar) pushed up gold. A general bullish tone in other commodities encouraged buying in gold," said said Shuji Sugata, a manager at Mitsubishi Corp Futures and Securities in Tokyo...

Analysts said gold's bounce on Monday appeared more likely to be cautionary short-covering after a tumble from nearly $1,000 an ounce in mid-July, with some uncertainty still lingering.

"I don't think investors are building new longs actively now after seeing sharp declines in recent trading," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management in Tokyo. "Gold is up now, but once when the financial markets settle down, I think gold will fall again," Kageyama said.

The outlook of gold was still bearish, but it could gather safe-haven appeal with the outlook for the U.S. currency and the economy unclear, traders said.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe