Comex June gold settles up $9.10, or 0.6%, at $1,557.50
Pause in dollar gains spur short-covering in gold
Central banks continue to add to gold holdings in April and May, lifting sentiment
NEW YORK (Dow Jones)–Gold futures gained for the first time this week on Thursday, as a brief pause in the dollar’s upward march spurred some investors who had bet on lower prices for the precious metalto close out those bets.
The U.S. dollar was lower against some major trading partners early in New York’s trading day, as this week’s escalation in worries about Europe’s sovereign-debt crisis slowed. Some upbeat U.S. economic data and gains in European markets limited demand for the currency as a safe haven, and European leaders at a summit reaffirmed their wish for Greece to remain in the euro zone, though they didn’t announce any new agreements to contain the spread of the euro zone’s crisis.
That, in turn, supported the battered gold market.
The most actively traded gold contract, for June delivery, rose $9.10, or 0.6%, to settle at $1,557.50 a troy ounce on the Comex division of the New York Mercantile Exchange.
“Today’s sharp rally [was] mostly dollar related,” said George Gero, a vice president and precious metals strategist with RBC Capital Markets, in a note.
Gold futures sold off sharply at the beginning of the week, weighed down along with the euro and global equities markets as investors worried that political gridlock in the euro zone could push Greece to leave the currency union. The dollar gained as investors sought a safe harbor from the potential resulting European banking crisis.
Though gold is seen by some investors as a safe haven, the metal hasn’t behaved that way during the latest escalation in Europe’s sovereign-debt crisis. Investors have generally chosen the U.S. dollar, pushing the currency higher and making dollar-denominated gold futures more expensive for buyers using other currencies. The surge in the currency has also diminished demand for precious metals as a hedge against declines in the currency.
Gold’s losing streak came to an end as gold sellers pulled back after the end of floor trading on Wednesday.
“Once again, the price of gold has successfully held firm at the $1,530 a troy ounce mark,” analysts with Commerzbank said in a note.
By Matt Day Of DOW JONES NEWSWIRES