Gold futures on Tuesday settled higher for the first time in four sessions, with bullion eking out a gain after putting in the lowest settlement since March on Monday, following a plunge of more than 5% intraday in early Asian trading hours.
On Tuesday, December gold
ended $5.20, or 0.3%, higher at $1,731.70 an ounce, a day after bullion skidded 2.1% for the lowest settlement since March 31. The gain marks the first session since Aug. 4 that the precious metal is settling in positive territory.
“Gold has stabilised after a turbulent start to the week,” wrote Craig Erlam, senior market analyst at Oanda, in a Tuesday research note.
“One thing that may limit downside is that a taper” of the Federal Reserve’s asset-purchase program “is so heavily priced in now, that we could see diminishing effects from the ongoing hawkish commentary from Fed figures,” the Oanda analyst wrote.
The analyst said that gold is under pressure after the latest monthly U.S. jobs report, released on Friday, reignited the threat of the Fed tapering its monthly $120 billion asset purchases and eventually raising benchmark interest rates, which currently stand at a range between 0% and 0.25%.
However, Monday’s selloff in gold may have been a bit overdone, due to thin volumes in Asia, with Japan and Singapore closed for holidays, James Steel, chief precious metals analyst at HSBC.
“This suggests an overreaction to the downside, and as trading went on substantial losses were cut,” Steel noted, referring to the worst of selling on Monday in Asian hours which saw gold fall by more than 5% intraday.
“This is quite encouraging for those still inclined to be gold bullish,” the analyst wrote.
The HSBC analyst also argues that a recent downshift in demand for gold by exchange-traded funds and other institutional buyers could be replaced somewhat by physical demand for bullion from jewelry stores and the creation of bars and coins.
“Jewelry, and bar and coin demand specifically could fill much of
the gap left by institutional investors. This type of buying surfaced in Asia and Europe, as well as the US, in response to the sell-off,” the strategist wrote.
Meanwhile, silver futures for September
were up 12.3 cents, or 0.5%, to settle at $23.392 an ounce, after shedding 3.8% on Monday.
In other metals trading, copper for September delivery
added 6.45 cents, or 1.5%, to close at $4.3540 a pound, following a 1.3% loss a day ago.
on Tuesday picked up $16.10 to settle at $987 an ounce, a rise of 1.7%, after a 0.1% slide on Monday; palladium for September delivery
rallied by $47.90, or 1.8%, to finish at $2,650 an ounce.