NEW YORK, Oct 22: Gold rebounded on Friday in New York on bargain hunting by consumers and bullish investors, enjoying extra buying late in the session from a bomb scare near the US Capitol building in Washington D.C.
There was a bit of weekend short covering, which was prompted by a suspicious package that was near Capitol Hill, said Bernard Hunter, a director of precious metals trading at ScotiaMocatta in Toronto. It eventually ran some stops and I think it was probably more just dealers squaring up a bit.
Gold for December delivery ended up $5.90 at $469.10 an ounce at the COMEX division of the New York Mercantile Exchange, trading from $462.70 to $469.10.
An additional $4 came after midday as police questioned two men and destroyed a suspicious package in their car after the pair suggested the vehicle contained an explosive device, U.S. Capitol Police said.
The contract has snapped back sharply since plumbing a 3-1/2 week low on Thursday at $462. Only eight days earlier it reached its costliest in 18 years at $480.25 an ounce.
We’re a good $15 or $16 off from the highs and physical demand is pretty good down here, said a trader at a metals refining company. I think we are going to see pretty decent support from here down to $457, which was big resistance and a previous high.
With open interest and the net long position held by large traders at record highs, gold looked technically overbought on the COMEX, leading some funds and speculators to take profits.
The latest weekly data on non commercial positions will be released by the Commodity Futures and Trading Commission late Friday.
Last week, the CFTC’s Commitments of Traders report, which measures from Tuesday to Tuesday, showed the net speculative long position was 177,410 contracts, up from 171,498.
Still, many investors and analysts feel that growing concerns about inflation and US economic growth arising from high energy costs should help gold rally up toward $500, a key psychological level, in the near-term.
Gold was last above $500 an ounce in December 1987.
Bullion consumers in India, the world’s largest market for gold, are getting used to paying high prices. Physical buying usually picks up at this time of year, ahead of India’s festival and wedding season.—Reuters
