Gold prices tally best one-day gain

NEW DELHI, Sept 15 (Market Watch): Gold futures climbed on Monday to tally their largest one-day gain of the month so far, as weakness in the dollar and low government bond yields helped to keep the precious metal trading in a range that some market experts see as forming a bullish pattern.

Jim Wyckoff, senior analyst at Kitco.com, said that gold may be set to "break" higher despite gains in equities that have suggested that risk appetite on Wall Street is improving, a scenario that would usually deflate appetite for haven metals like gold.

"Importantly, recent sideways and choppy price action in gold has produced a bullish coiling pattern on the daily bar chart, suggesting the market is storing up energy for a bigger price move coming soon (possibly this week), and odds favor that price move being on the upside," Wyckoff wrote.

Equity markets have drawn some optimism from hope of a vaccine for Covid-19, a bearish factor for bullion, but anticipation about coming volatility from US presidential election in November also has buttressed gold buying.

December gold GCZ20, +0.72 per cent GC00, +0.72 per cent rose $15.80, or 0.8 per cent, to settle at $1,963.70 an ounce, following a 0.7 per cent weekly gain for the yellow metal.

Prices based on the most actively traded contracts saw their strongest single-session per centage and dollar gain so far this month, according to FactSet data.

Meanwhile, December silver SIZ20, +1.22 per cent SI00, +1.22 per cent added 50 cents, or nearly 1.9 per cent, to close at $27.355 an ounce after gold's sister asset climbed by 0.5 per cent last week. The gains for the precious metal also follow weakness in the US dollar, which was off 0.3 per cent in Monday dealings, as gauged by the ICE US Dollar Index DXY, -0.15 per cent, a measure of the buck against a half-dozen currencies. The 10-year Treasury note yield, 0.685 per cent also was hanging below 0.70 per cent.

Lower yields for government debt make gold a more compelling option for investors comparing investing in metals against Treasurys and a weaker dollar can make buck-pegged assets more attractive to overseas buyers.

On a more cautious note, Craig Erlam, senior market analyst at Oanda, said in a Monday note that although the long-term bullish case for gold remains intact, there is a possibility of a corrective move. "This temporary setback for the dollar - and reprieve for gold - may not last though with a corrective move in both cases still looking plausible in the near future," Erlam said.