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Comex Gold Recovers After Consumer Sentiment, Short Covering, Softer Dollar
By Kitco · March 16, 2012 · 10:03 am · Leave a Comment
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By Allen Sykora
Gold futures recovered from earlier weakness following a softer report on U.S. consumer sentiment, a weak U.S. dollar and short covering ahead of the weekend, traders said.
Around 11 a.m. EDT, gold for April delivery was nearly flat for the day—up 10 cents to $1,659.70 an ounce–on the Comex division of the New York Mercantile Exchange after rallying from an earlier low $1,639.70. May silver was down 11.1 cents to $32.615 but up from a $32.135 bottom.
Gold followed the euro higher after soft U.S. economic data, said a New York trader. The metal had been down for the week after a strong retail-sales report and improved economic assessment from the Federal Open Market Committee Tuesday diminished hopes for more U.S. quantitative easing. However, a consumer-sentiment reading from the University of Michigan and Thomson Reuters suggested some economic concerns are lingering, with the index declining for the first time since August. It fell to 74.3 in mid-March from 75.3 at the end of February.
“I don’t think it’s that major in the scheme of things, but certainly caught the market’s attention,” said the New York trader. Further, the Federal Reserve reported that industrial production was flat in February.
Also, he said, gold has taken “some real knocks” lately. “So on a Friday, you’re seeing some short covering,” said the trader. This is when traders buy to exit or offset positions in which they previously sold.
Daniel Pavilonis, senior commodities broker with R.J. O’Brien & Associates, commented that gold bounced just ahead of chart support.
He blamed some of the overnight weakness on news reports that India’s government proposed hiking the duty on gold imports. The worry is this will make the metal more expensive in the country, one of the world’s largest gold consumers, and thus could hurt imports.
Gold then bounced back when the dollar fell, Pavilonis said. The euro was up to $1.3173 from $1.3081 late Thursday.
Pavilonis put nearby chart resistance for April gold around $1,660, then $1,671.
