Gold Price Starts to Recover as Market Euphoria Evaporates
Source: Reuters, Carole Vaporean (4/8/09)
"After a few days of decline following the G20, the gold price has started to pick up again. . ."
Gold also got a lift from a forecast from metals consultancy GFMS for prices to climb above $1,100 an ounce this year amid financial uncertainty around the globe.
Spot gold climbed to $880.90/882.50 a troy ounce by 4:50 p.m. EDT, against $868.80 late Monday in New York. Gold fell as low as $864.30 on Monday, its lowest point since January 23.
In New York, gold for June delivery closed $10.50, or 1.20%, higher at $883.30 an ounce on the COMEX division of the New York Mercantile Exchange.
Analysts said GFMS's positive price projections gave a healthy lift to gold, which had headed lower in early trading.
The annual report said fears about rising inflation, potential dollar weakness, and fears over financial instability all supported gold.
Gold prices are still down about 12% from an 11-month high above $1,000 hit in February. But analysts said a dose of reality on the overall vulnerability of the global economy could well see it topping the $1,000 mark again.
Expectations for another lousy corporate earnings period drew safe-haven investors back into the dollar as well as gold.
"Gold's performance today is impressive, even more so given that the dollar has strengthened," said Citi analyst David Thurtell.
Falling bullion prices prompted India to buy some gold early in the global session, raising hopes the world's largest consumer could be looking for more during the wedding season, dealers said.
Though some traders said gold may have been oversold, the metal remains vulnerable for now to any signs of investors shifting money into other assets.
"Although investor sentiment remains positive toward the metal, ETF flows have slowed and prices have been hit with profit-taking," Barclays Capital said in a note.
"The surge in investment demand had offset the slowdown in jewelry consumption but now prices remain dependent upon either further investment demand inflows or resumption in physical fabrication demand."