Flashback: Industrial demand for silver sharpens bullish view | Global demand for gold investment soars 38% in past year | The search for the mint’s missing gold | Royal Canadian Mint’s ‘lost’ gold worth a mint | Bullion and Bandits: The Improbable Rise and Fall of E-Gold | Has the Mint’s gold vanished? | Bank crisis spawns new kind of gold rush | Gold Tops $1,000, First Time Since March as Recession Deepens | Manipulation Of Gold And Silver Prices Further Exposed | Analysts Predict Hyper-Inflation To Push Gold To $2000, Oil to $300 | Ottawa warns on gold-backed Web trades
Frank Tang, Globe and Mail
September 4, 2009
Traders say precious metal may be vulnerable to profit-taking after latest rally
Gold futures (GC-FT1,001.601.800.18%) ended $1 (U.S.) lower Friday as prices failed to surpass $1,000 an ounce, and the precious metal could be vulnerable to near-term profit taking after this week’s rally, traders said.
U.S. December gold futures settled down $1 at $996.70 an ounce on the Comex division of the New York Mercantile Exchange. It hit a session peak of $998.40, the highest price since Feb. 24.
Spot gold at $991.50 an ounce at 2:56 p.m. ET, compared with $990.10 late in New York Thursday. Prices remained within sight of the $1,030.80 high hit in March, 2008.
Gold prices were largely unchanged after the Labour Department reported the smallest decline in U.S. non-farm payrolls in a year in August. Still, the unemployment rate jumped to a 26-year high of 9.7 per cent.
“Gold is holding its own,” said Calyon analyst Robin Bhar. “The data is not bullish or bearish for gold, it is probably neutral. But we have had a good run, we have gained $40 in three days, so people are taking some money off the table.”
Gold rallied this week amid fears that the stock market could swoon and inflation could rise with central banks pumping money into the economy to fight the global recession.
“There are some concerns about the equities market, and people are very concerned about inflation because of government spending. It is a highly speculative move with not a lot of demand,” said Bruce Dunn, vice-president of trading at New Jersey-based Auramet Trading.
Bullion benefited from short covering by investors who had sold call options, technical buying and position squaring ahead of a long weekend because of the Labour Day holiday on Monday, Mr. Dunn said.
In addition, traders reported bullion buying related to closings of energy and other commodities exchange-traded products (ETNs) amid increased scrutiny by the Commodity Futures Trading Commission, the U.S. futures market regulator.
Silver (SI-FT16.570.060.36%) also held above $16 an ounce to hit a session high of $16.32, its firmest level since August, 2008, boosted by gains in gold.
Buying of gold exchange-traded funds picked up, with holdings of the largest, New York’s SPDR Gold Trust, posting the biggest one-day percentage rise since March.
The No. 1 iShares Silver Trust also posted an increase in holdings.
Traders said investors were fleeing to precious metals because they were losing confidence in a global economic recovery as Shanghai stocks hit three-month lows this week.
However, Auramet’s Mr. Dunn said gold prices should eventually head lower because the rally was short on physical demand.
The price of gold has risen toward the $1,000 an ounce level several times in the past 18 months, but each rally was followed by sharp decline.
Among other precious metals, silver was at $16.16 an ounce against its previous finish of $16.08.
Elsewhere, platinum (PL-FT1,295.005.400.42%) was at $1,247 an ounce against $1,249.50, while palladium (PA-FT296.00-2.60-0.87%) was at $290 against its previous market close of $289.
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