Gold Rebounds as Oil Lowers Inflation Concerns

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Gold Rebounds as Oil Lowers Inflation Concerns

Gold futures rose the highest in  a week as gains in prices of oil dampened concerns that the inflation will be lower, reviving the metal’s demand as a store of wealth.

Aggregate trading almost doubled in comparison to the 100-day average data. Yesterday, trading in gold options indicated that traders were less interested in the further price declines with the losses for the three-most traded puts. Brent crude increased more than 2.8% today.

Bloomberg Businessweek quoted director of metals trading at Vision Financial Markets, David Merger as having said, “The spike in oil prices acted as a catalyst. There was a lot of fund buying.”

December delivery gold futures increase 1.35 to $1,176.10 per ounce on the Comex in New York, on track for the largest gain since November 7. The total volume was estimated at 225,706 contracts.

Above 10,000 December delivery gold contracts were traded at 10.06 am and prices rose around 1.5% within six minutes and erased the previous declines.

According to Market Watch, head of commodity research at Commerzbank, Eugen Weinberg had said in a note earlier in the week that the outflows were being suffered by gold exchange traded products and that was likely to continue as long as the US equities continued to surge.

He said that institutional investors are forced to invest their capital in assets that have better returns because of performance reasons.

Senior commodity broker at R.J. O’Brien & Associates, Phil Streible said, “A lot of buy stops were triggered at $1,167.40 and that brought in the upward momentum. Today’s run-up was largely technical, and a few investors bought gold after oil prices showed some strength.”

December delivery silver futures gained 1.8% to $15.90 per ounce. The price has dropped as much as 2.4% earlier. The aggregate trading was 73% above the 100-day average.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com