US gold ends higher in choppy trade, tracks oil

US gold ends higher in choppy trade, tracks oil

Gold futures finished higher after it seesawed early on Tuesday, recovering some of last week’s five-percent drop, as the precious metal closely tracked volatile oil prices which had plunged to a 1-1/2 year low before paring losses.

Analysts said gold trading might remain choppy and back-and-forth because of thin volume in the beginning of the year.

Benchmark gold for February delivery on the COMEX metals trading division of the New York Mercantile Exchange settled up $5.60 at $615.00 an ounce, trading in a range of $607.00 and $617.40 an ounce.

Estimated volume was 28,000 contracts and options turnover was 19,700. Turnover in the Chicago Board of Trade’s electronically traded 100-oz gold contract was 45,088 contracts as of 2:41 p.m. EST (1941 GMT).

Gold climbed in overnight sessions, trading as high as $615.40 an ounce. The February contract changed directions several times during open outcry before finally turning higher as oil recovered most of its losses.

Stephen Platt, analyst at Archer Financials, said that the precious metals markets were taking cues from crude oil.

Oil prices tumbled as much as $2 a barrel earlier in the session on mild winter weather in the United States and waning interest from big investors in commodities indices.

Oil is down roughly 8 percent since the start of the year. On Tuesday U.S. crude fell as low as $53.88 during electronic trading before it cut losses and ended down 45 cents at $55.64 a barrel.

Gold often moves with energy prices as the yellow metal is generally seen as a hedge against oil-led inflation.

“People are a little bit cautious here given how oversold the markets are,” said Platt. “On the other hand, they are very cautious in terms of pursuing the markets on the upside.”

Platt added that trading was thin right now.

“If you get any kind of gyration in the energies, the markets are probably going to respond to it,” said Platt.

Paul McLeod, vice president-precious metals at Commerzbank, called Tuesday’s session “another day of consolidation after the heavy sell-off on Friday.”

Gold plunged more than 3 percent on Friday, its biggest one-day percentage drop in three months, hitting an intra-day low of $603.00, a level last seen on Oct. 27.

“We are seeing some physical support on the dips,” said McLeod. “We are building a base here from which we can attempt to recover the losses from the first week of the year.”

Bruce Dunn at Auramet Trading said that gold was soft early because of the continued strength of the dollar, rebalancing of commodities linked to indices, a lower oil market and weak base metals.

“It’s a combination of things that are weighing on the market right now,” said Dunn.

Investors now await economic indicators due later this week — the U.S. trade deficit on Wednesday, weekly initial jobless claims as well as interest-rate decisions by the European Central Bank and Bank of England on Thursday — which could set the direction for the dollar and gold.

Spot gold was quoted at $612.80/3.80, above $608.50/9.50 in late trade on Monday. London’s afternoon gold fix was $609.60.

In other precious metals, COMEX March silver ended up $23.50 at $12.595 an ounce, traded between $12.265 and $12.620.

Spot silver rose to $12.450/2.520, up from $12.260/2.330 an ounce at the previous close. Silver was fixed in London at $12.360 an ounce.

NYMEX April platinum closed up $6.80 $1,133.70 an ounce. Spot platinum fetched $1,123.00/1,128.00.

NYMEX March palladium eased down 55 cents to finish at $331.55 an ounce. Spot palladium was quoted at $326/330.00.

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