Monday, 16 November 2015 18:06
LONDON: Gold rose about one percent on Monday, rebounding from a six-year low hit last week as the multiple attacks in Paris led to a bout of global risk aversion.
Attacks in Paris on Friday killed 129 people, prompting France to launch air strikes in Syria against Islamic State, which claimed responsibility.
Spot gold rose as much as 1.4 percent to $ 1,097.90 an ounce, a 10-day high, and was up 0.8 at $ 1,092.40 by 1106 GMT. U.S. gold futures rose more than 1 percent to a session high of $ 1,097.
In the first 10 minutes of Monday trade, just under 3,000 lots changed hands, almost 10 times the 300-lot average for the opening 10 minutes over the past two months, according to Reuters calculations.
Before Monday’s gains, gold had fallen for 12 sessions out of 13 on increasing bets that the Federal Reserve would raise U.S. rates next month. It hit a near-six-year low of $ 1,074.26 on Thursday, on the grounds higher rates would increase the opportunity cost of holding the non-yielding asset.
“If you come in Monday morning and the market is negatively positioned and you have dreadful news like that one, then the initial reaction from traders would be to have a go on the upside and see how far they can take it,” Saxo Bank senior manager Ole Hansen said.
“And it looks as if we have seen most of that move already and the metal is struggling to make it back above $ 1,100.”
At a G20 summit in Turkey, U.S. President Barack Obama vowed to step up efforts to eliminate Islamic State and prevent it carrying out attacks such as those in Paris. EU leaders urged Russia to focus its military efforts on the Islamist militants.
European shares and U.S. stock futures were lower and the euro skidded to a 6-1/2-month low against the yen in the wake of the Paris attacks.
Persistent weakness in stocks could further boost bullion, typically seen as a safe refuge during times of uncertainty. However, there has not been an increase in demand from retail investors have since the Paris attacks, German coin dealer Degussa said in an emailed statement.
“(Buying was) already relatively high throughout last week, but the reason for that was clearly the most recent price drop,” it said.
Tracking gold, other precious metals all gained. Silver rose 0.8 percent to $ 14.36 an ounce, platinum climbed 1.5 percent to $ 867.70 an ounce and palladium was up 1.1 percent at $ 541.90.
