Gold Futures Rebound After Last Week's Thumping
Source: MarketWatch, Claudia Assis and Deborah Levine (5/24/10)
"Gold is pretty much on sale right now."
Gold futures for June delivery rose $16.70, or 1.4%, to $1,192.20 on the Comex.
Gold dropped $51.70 last week, the worst weekly drop since the five-day period ended Feb. 27, 2009. Gold closed at a record of $1,243.10/oz. on May 12.
"Gold is pretty much on sale right now," said James Cordier, a portfolio manager with Optionsellers.com. "It reached a level price-wise that brought buyers back to the market."
Uncertainties regarding the euro zone and the global economic recovery are still prevalent, Cordier added. Gold prices have moved beyond from supply and demand dynamics as "it has turned into a currency," Cordier said.
Gold's slide was due to renewed worries over the impact of European government debt, stoked by Germany's decision to implement a ban on "naked" short selling of financial stocks, euro-zone bonds and sovereign-debt credit-default swaps.
"We remain bullish on the gold price; although we acknowledge that an increasing share of investment consumption in global gold demand will continue to increase volatility in the gold price," said John Meyer, an analyst at Fairfax in London.
"Although market sentiment remains cautious and prices have sidelined constructive fundamental developments, prices showed signs of stabilizing on Friday as the euro regained some ground against the dollar and equity markets rebounded," analysts at Barclays Capital said in a report.
Palladium led the metals rebound, up 3.7% Monday. Palladium for June delivery added $16.25 to $455.70 an ounce on Comex.
Platinum futures for July added $33.30, or 2.2%, to $1,534.50 an ounce.
Silver for July delivery added 38 cents, or 2.2%, to $18.04 an ounce. Copper for July delivery advanced 8 cents, or 2.5%, to $3.14 a pound.