* Spot gold up more than $100 since April 16 low
* Bargain hunters, physical buyers behind the lift
* Strong buying seen in Asia, ETF holdings drop
By Susan Thomas and Carole Vaporean
NEW YORK/LONDON, April 22 Gold rose closed up
1.5 percent on Monday, cutting gains late in the session but
remaining supported by strong physical buying, after the price
hit a two-year low last week.
At the same time, investors reduced bullion holdings in the
top exchange-traded fund to the lowest level in nearly three
The near-term technical outlook remains positive for gold,
which is down more than 15 percent this year. Longer term,
however, it may resume its downtrend despite the physical buying
in Asia and elsewhere.
At one point, spot gold was up 2.48 percent at a
session-high of $1,438.66 per ounce. That was more than $100
higher than the two-year low of $1,321 last Tuesday. In later
trading bullion fetched $1,424.30 per ounce, up 1.47 percent
from late Friday.
U.S. gold futures hit an intraday high of $1,438.80 an ounce
on Monday from the previous close of $1,395.60. COMEX gold for
June delivery finished at $1,421.20, up 1.8 percent, then
rallied to $1,426.70 in after-hours trade.
"The continued technical bounce off the recent lows is being
prompted by the bargain hunting and strong physical demand that
we've seen in the market from this recent sell off," said David
Meger, vice president and director of metals trading, at Vision
Financial Markets in Chicago, Illinois.
Gold posted its biggest-ever daily loss in dollar terms last
Monday, shocking investors who have used gold as protection
against inflation and other market risks.
"Physical demand is giving the price a psychological boost,
but don't think that could make up for the 65-tonne outflows
from ETFs last week," Saxo Bank senior manager Ole Hansen said.
The U.S. Mint reported sales of gold coins to the public of
167,500 ounces so far in April, the highest level since May
2010, Barclays said in a note to clients.
"The market is vulnerable to intense short covering ...
while many physical players see these prices as very attractive
indeed and will chase price dips," VTB analyst Andrey
"However, we still believe the market went through a
fundamental shift and that a sustained rebound ...is very
Gold prices thrive in a high-inflation, low-interest rate
environment, because this reduces the opportunity cost of
holding a metal that pays no yield.
It had rallied to an 11-month high in October last year
after the Fed announced its third round of aggressive economic
stimulus, raising fears the move would stoke inflation.
Outflows from exchange-traded funds could indicate that
investors are parking their money in assets other than gold, but
last week's trading data from the United States also showed that
funds had injected new money into gold futures.
Holdings of the largest gold-backed exchange-traded-fund,
New York's SPDR Gold Trust , dropped 0.88
percent on Friday to their lowest level since March 2010.
Hedge funds and money managers raised their net longs in
gold futures and options in the week to April 16, a report by
Commodity Futures Trading Commission showed on Friday, as new
money entered the market at lower prices.
Other precious metals benefited from gold's gains, with
silver up 0.86 percent at $23.37 an ounce and palladium
1.26 percent higher at $680.50. Platinum rose 0.65
percent at $1,431.24 an ounce.