Gold Extends Rally After Sharp 2013 Losses

Friday, 03 Jan 2014 05:00 PM

 

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Gold rose 1 percent on Friday, extending the previous session's sharp rally boosted by renewed fund buying and equities' weakness after bullion posted its worst annual decline in more than 30 years.

A combination of brisk coin buying, strong Chinese physical demand and new positions initiated by funds related to new-year index rebalancing also helped lift gold to a weekly gain of more than 2 percent, its largely rise in 10 weeks.

Analysts said that gold appeared to find support from equities' losses this week after bullion's tumble and the stock market's strong run last year.

"Positive bullion prices in reaction to the decline in equities may set the tone for 2014 and reinforce the negative correlation between the two," said James Steel, chief precious metals analyst at HSBC.

Spot gold was up 1.1 percent to $1,238.44 an ounce by 1:13 p.m. EST (1813 GMT). U.S. Comex gold futures for February delivery rose $13.10 to $1,238.30 an ounce, with trading volume on track to finish below its 30-day average, preliminary Reuters data showed.

Gold's gains came after it lost nearly 30 percent in 2013, ending a 12-year bull run, largely due to the U.S. Federal Reserve's plan to unwind its monetary stimulus. Bullion's second day of sharp gains came as U.S. stocks eased on Friday, extending a broad decline in the new year with major indexes on track to end the week lower.

Premiums on the Shanghai Gold Exchange showed that Chinese buying has picked up in recent days as global prices hovered around $1,200 near the end of 2013, dealers said. Also boosting gold market sentiment were brisk sales of the U.S. Mint's new 2014-dated American Eagle gold coins on the first business day of the year, extending last year's strength boosted by gold prices' broad decline.

© 2014 Thomson/Reuters. All rights reserved.

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