Gold Futures Up Toward $1,600 Per Troy Ounce Posted by James Randolph on April 01, 2013
U.S. gold futures for June delivery gained $2.60 or 0.2 percent to $1,598.30 per troy ounce in early Monday trade, teasing the psychologically and technically important $1,600 per troy ounce level following the market’s three day weekend in celebration of Good Friday and Easter.
In tracking the most-active contracts, gold futures gained 1.1 percent in March.
Early gains in gold on Monday were made as the U.S. dollar weakened against a basket of major currencies. A weaker dollar makes gold more affordable for holders of foreign currency, stoking demand.
Gold also benefitted from signs that China’s economic recovery is gaining traction as tension in the Korean peninsula increased. Safe haven demand in the gold market has been increasing in waves since the fourth quarter of 2012 and the fiscal cliff debates.
The price of gold reached an intraday high of $1,600.81 per tory ounce, losing slight ground to $1,597.76 per troy ounce for a gain of $1.59. Rallies in the stock market coupled with a strong dollar against the euro have limited gold’s performance in the first quarter of 2013.
Following concerns about the financial stability in Europe after the European Union required Cyprus to raise billions of euros to secure its bailout package, the price of gold rallied to a one-month high.
Brian Lan, managing director of GoldSilver Central Pte Ltd. said we are in an uncertain market and the North Korea tension is adding to the market uncertainty. He also said we see physical buying by the retail investors during price dips and this helped to support prices, which should go up above $1,600. He added that if everything goes well, it seems like gold could move on to a higher trading range, testing $1,620.
North Korea’s young new leader, Kim Jong-un, ordered a nuclear weapons test in February, breaching U.N. sanctions and ignoring warnings from North Korea’s ally, China. This has dramatically increased tensions on the Korean peninsula and Asia.
Concerns about armed conflict in the Koreas have coupled with continued concerns about Cyprus. The recent bailout deal that included a taxation of bank deposits has worried investors as it might be a template, as some European Union officials have called it, for future taxation programs in other troubled economies.