Gold up 1.3 percent on Wall Street rise
NEW YORK/LONDON |
NEW YORK/LONDON (Reuters) - Gold surged more than 1 percent to a three-week high on Tuesday, rallying with the stock market on optimism toward the global economy after a bullish forecast by aluminum maker Alcoa.
The rise brought bullion back to the 200-day moving average it had fallen below in mid-December, which also improved buying sentiment. The metal, which entered a bear market two weeks ago, is up nearly 5 percent so far this year.
Silver rallied over 3 percent and platinum group metals also gained after Alcoa Inc's (AA.N) revenues beat expectations and the company gave a positive outlook for global aluminum demand, especially in the automotive markets.
"It's not so much investors are buying gold because the world is falling part. It's just another place for people to make money," said Rick Bensignor, chief market strategist at Merlin Securities.
Spot gold was up 1.3 percent at $1,631.10 an ounce by 2:11 p.m. EST (1911 GMT), after rising to a high of $1,639.60. Spot bullion ended the day near its 200-day average at $1,634.
U.S. gold futures for February delivery settled up $23.40 an ounce at $1,631.50.
Trading volume was about 20 percent above its 30-day average, consistent with the pace last week when bullion prices recovered after thin holiday trade.
COMEX gold options floor traders said that investors were busy selling options and buying calls, typical bullish plays on a day when futures rally.
"As we enter the new year, there is more optimism surrounding Europe. And in general economic data has been strong, making people think that we could potentially see that inflationary pressure develop," said Bill O'Neill, partner of commodities investment firm LOGIC Advisors.
Gold has been in virtual lockstep with the euro and riskier assets for the past two months. However, bullion appeared to break ranks with the shared currency in the past several days as the metal was deemed oversold after falling as much as 20 percent from its September record high of $1,920.30 an ounce.
SILVER, PGM RISE BROADLY
Spot silver rose 3 percent to $29.86 an ounce.
Analysts said that the price potential for silver, a traditionally speculative metal, appears better than gold.
"Silver is well away from its 200-day (moving average) while
gold is at it. So, if metals are going to move, silver has room to go before it's going to hit resistance," said Bensignor.
Eastman Kodak Co EK.N announced a new business structure on Tuesday that eliminates its film group, as the once-iconic photography company and leading end-user of silver tries to refocus as a digital company to fend off financial difficulties.
Platinum group metals were the biggest risers in percentage terms, with spot platinum up 2.7 percent to $1,460.74 an ounce and spot palladium up 2.7 percent at $629.80 an ounce. Platinum earlier hit a one-month high at $1,467.50.
The gold/platinum ratio -- a measure of the number of platinum ounces needed to buy an ounce of gold, which has typically held below 1 -- hovered at 1.12, near at least a 25 year high.
(Reporting By Frank Tang; editing by Jim Marshall)
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