Gold, silver rally as new year rekindles risk appetite
Wednesday, 4 January 2012
SINGAPORE, Jan 3 (Reuters): Gold rallied more than one per cent and silver jumped over 2 per cent Tuesday as investors returned in the new year with a renewed appetite for riskier assets such as commodities, although global economic worries still weighed on sentiment.
Better-than-expected manufacturing data from China fuelled interest among investors who had moved to the sidelines because of year-end credit tightness. A weaker dollar also helped fuel gains in commodities.
"Everyone is a bit more optimistic at the beginning of the year," said Ong Yi Ling, an analyst at Phillip Futures. But Ong cautioned that the euphoria may not last long for gold as market sentiment remains fickle due to the shaky global economic outlook.
Gold could drop below $1,500 in the first quarter of 2012 and is unlikely to test its record high hit last September until later 2012, a poll showed.
Spot gold rose as much as 1.5 per cent to $1,589.65 an ounce and eased slightly to $1,588.29 by 0724 GMT, rebounding from a 10 per cent loss in December.
The most-active US gold futures contract rallied 1.5 per cent to $1,589.50.
Technical analysis suggested spot gold could rise towards $1,629 an ounce during the day, said a market analyst Wang Tao.
Iran's progress in its nuclear pursuit has gripped the oil market and could potentially support safe haven demand in gold. But for now, gold's move hinges on macroeconomic conditions and changes in risk appetite.
Investors await a raft of US economic data this week, including ISM Manufacturing PMI later in the day, factory orders on Wednesday and non-farm payroll data Friday, after recent data showed that the world's top economy was recovering.
Cash silver gained 2.2 per cent to $28.41, leading the rally in the precious metals complex. US silver rose 1.8 per cent to $28.41.
The metal, with extensive industrial applications, lost nearly 10 per cent in 2011 as worries about the global economy weakened prospects of industrial metals.
"Silver is one of the more appealling trades of the new year, after a lot of positions have been emptied out," said a Singapore-based trader.
Better-than-expected manufacturing data from China fuelled interest among investors who had moved to the sidelines because of year-end credit tightness. A weaker dollar also helped fuel gains in commodities.
"Everyone is a bit more optimistic at the beginning of the year," said Ong Yi Ling, an analyst at Phillip Futures. But Ong cautioned that the euphoria may not last long for gold as market sentiment remains fickle due to the shaky global economic outlook.
Gold could drop below $1,500 in the first quarter of 2012 and is unlikely to test its record high hit last September until later 2012, a poll showed.
Spot gold rose as much as 1.5 per cent to $1,589.65 an ounce and eased slightly to $1,588.29 by 0724 GMT, rebounding from a 10 per cent loss in December.
The most-active US gold futures contract rallied 1.5 per cent to $1,589.50.
Technical analysis suggested spot gold could rise towards $1,629 an ounce during the day, said a market analyst Wang Tao.
Iran's progress in its nuclear pursuit has gripped the oil market and could potentially support safe haven demand in gold. But for now, gold's move hinges on macroeconomic conditions and changes in risk appetite.
Investors await a raft of US economic data this week, including ISM Manufacturing PMI later in the day, factory orders on Wednesday and non-farm payroll data Friday, after recent data showed that the world's top economy was recovering.
Cash silver gained 2.2 per cent to $28.41, leading the rally in the precious metals complex. US silver rose 1.8 per cent to $28.41.
The metal, with extensive industrial applications, lost nearly 10 per cent in 2011 as worries about the global economy weakened prospects of industrial metals.
"Silver is one of the more appealling trades of the new year, after a lot of positions have been emptied out," said a Singapore-based trader.