Gold rises on oil, dollar; banks and investors buy

SINGAPORE - Gold extended gains on Monday, driven by purchases from banks, investors and speculators after oil prices jumped and weak US payrolls data put pressure on the dollar.

By (Reuters)

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Published: Mon 7 Apr 2008, 1:35 PM

Last updated: Sun 5 Apr 2015, 11:36 AM

Silver tracked gold, while platinum extended gains on persistent worries about output in main producer South Africa, which accounts for 80 percent of the world’s supply.

Gold jumped to $915.25/916.25 an ounce from $908.40/909.20 an ounce on Friday but was still 11 percent below a record of $1,030.80 ounce hit on March 17.

In addition to speculators, jewellers have been buying gold at the lows, helping the metal rebound from a two-month low of $872.90 an ounce last week.

“Most of the smart money is still on the long side. They include bullion banks, institutions and hedge funds. Whenever gold hits a new low, there’s serious short covering in both gold and silver,” said William Kwan of Phillip Futures in Singapore.

Oil prices jumped to a one-week high near $107 a barrel on Monday, extending last week’s late rebound after the dollar fell and a fire hit a US refinery.

But the dollar rallied against the yen on Monday, hitting a high of 102.68 yen on electronic trading platform EBS, due to buying from Japanese investors at the start of the new business year. The euro dipped to $1.5670

The US Labour Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest drop in five years, while the jobless rate jumped to a 2-¢year high of 5.1 percent, raising expectations of more rate cuts in April.

“There’s some bits and pieces of buying out of TOCOM at the opening but it didn’t last long,” said a bullion dealer in Hong Kong, referring to purchases from Japanese speculators.

“I still expect the market to trade in a narrow range of $910 to $917 today. There’s a lack of follow through buying because I think people are still reluctant to take positions at the start of the new week.”

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $4.9 an ounce to $918.1 an ounce.

“Buying interest doesn’t only come from physical investors but also from short sellers in gold futures who cover back their positions,” said a dealer in Singapore.

“But I think the bearish signal persists. It has to go back above $940 this week to change the sentiments.”

Spot platinum rose to $2,012/2,022 an ounce from $2,005/2,015 late in New York on Friday on supply problems in South Africa, where a power shortage had disrupted mining and sent prices to a record high at $2,290 on March 4.

Implats, the world’s second-biggest platinum producer, said South Africa did not boost its power allotment to 95 percent from 90 percent.

The most active Tokyo platinum futures rose 131 yen per gram or 2 percent to 6,546 yen, reflecting a firm cash market.

Silver edged up to $17.86/17.91 an ounce from $17.77/17.82 an ounce. Spot palladium rose to $443/448 an ounce from $436/440 an ounce.



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