Home News Gold futures close higher, rebounding from two-month low
Gold futures close higher, rebounding from two-month low PDF Print E-mail
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Gold for August delivery added $9.80, or 0.8%, to $1,191.70 an ounce on the Comex division of the New York Mercantile Exchange.

"There are still a lot of bottom-fishers in the market," said Frank Lesh, broker and analyst at FuturePath Trading in Chicago.

Gold had ended below $1,182 an ounce on Monday, the weakest close for a most-active contract since May 21. Interest in gold had fallen in recent sessions alongside diminished concerns over debt problems in Europe, as underscored by Ireland's successful sale of government bonds Tuesday.

Spain and Greece also auctioned off Treasury bills Tuesday, further bolstering investor confidence in European sovereigns.

"That flight-to-safety is not evident at the moment," Lesh said. "Whether or not this is just a summer slowdown, we'll have to see. But there's not a lot of impetus."

Shares of the SPDR Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 116.65, +0.92, +0.79%) , the largest exchange-traded fund backed by gold, gained about 0.8%.

The dollar strengthened against the euro, overriding a worse-than-expected report showed that U.S. housing starts fell 5% during June.

The dollar index /quotes/comstock/11j!i:dxy0  (DXY  82.59, -0.16, -0.20%) , which tracks the greenback against a basket of six major currencies, rose to 82.77, up about 0.3% from Monday.

Gold's previous decline was driven by investor expectations of deflation, said Jeffrey Friedman, senior market strategist with Lind-Waldock.

"We were due for a correction. Gold had a nice run, making new highs when everything else could not," said Friedman.

"People are unwinding their gold positions in a continuation of a deflationary concept," he said. The analyst pointed to stagnant top-line results in recent earnings announcements and readings of low inflation from price indexes and the Federal Reserve, all of which suggests that investors "are showing no fear of inflation."

Investors also looked to the stock market as a barometer of economic conditions and, for base metals, of future industrial activity.

U.S. stocks spent part of the metals session lower as investors shot down shares of bellwethers like International Business Machines /quotes/comstock/13*!ibm/quotes/nls/ibm (IBM 126.55, -3.24, -2.50%) and Texas Instruments /quotes/comstock/13*!txn/quotes/nls/txn (TXN 24.77, -0.78, -3.05%) after disappointing quarterly results.

The major indexes rebounded, however, as details of Goldman Sachs Group Inc.'s /quotes/comstock/13*!gs/quotes/nls/gs (GS 148.91, +3.23, +2.22%) investment banking and securities business heartened investors, and analysts debated speculation that the Federal Reserve was readying a special program to boost lending.

Palladium rose $7.15, or 1.6%, to $451.05 an ounce, while silver closed 15 cents higher, or 0.9%, at $17.693 an ounce. September copper closed up 6 cents, or 2.2%, at $3 a pound. Platinum for October added $4.70, or 0.3%, to $1517.80 an ounce.
 
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