Gold shines in New Year; up 2pc
Singapore, January 2, 2014
Gold futures jumped 2 percent on Thursday as bargain hunters resurfaced after prices plunged to a six-month low, but optimism over the global economic outlook and the imminent end of the US Federal Reserve's monetary stimulus could cap gains.
Talks that Chinese buyers returned to buy gold also supported prices, but physical dealers attributed the rally to the thin market at the start of the new year. Cash gold tracked US bullion futures higher, rising more than 1 percent.
US gold for February hit a high of $1,227.20 an ounce and stood at $1.223.20 by 0401 GMT, up $20.90. The contract sank to $1,181.40 on December 31, its weakest since late June, as prospects for global economic recovery prompted investors to shift money into equities.
"The market is still thin. Some buying interest has then pushed up the market over $10," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "Sentiment wise, I would say this is only short covering."
Cash gold rose as high as $1,227.75 an ounce, and later stood at $1,224.10, up $18.81. It had dropped to $1,184.50 an ounce on Tuesday, its weakest since June 28.
Silver tracked gold higher and rallied more than 4 percent.
Gold plunged 28 percent in 2013, ending a 12-year bull run, after the Fed announced plans to unwind the ultra-loose monetary policy starting January 2014, tarnishing the metal's appeal as a hedge against inflation. Gold price was nearly $700 below a record hit in 2011.
"We've seen a sudden jump in prices, and I am not too sure why. But it could be some demand from China because they have been very quiet in the last one or two months," said a physical dealer in Singapore.
"They maybe taking the advantage of the low prices to buy. Indonesia is seller today because of the weak rupiah, and you would expect Thailand to do the same."
Premiums for gold bars in Singapore were little changed from last week at $1.30 to $1.50 an ounce to the spot London prices. - Reuters