Gold Ends at Two-Week High as Bears Exit
New York (Nov 14) Gold and silver prices rose to a two-week high on Friday as a rush by investors to cover bets on lower prices accelerated a rebound in both markets.
Gold for December delivery, the most active contract, rose $24.10, or 2.1%, to settle at $1,185.60 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest settlement since Oct. 30. Silver for December delivery rose 4.4% to $16.314 a troy ounce, also the highest settlement since Oct. 30.
Gold fell in morning trade, luring some price-sensitive buyers into the market, but the modest rebound quickly turned into a surge. As prices crossed above $1,160 an ounce, bursts of high-volume trading indicated that stop-loss orders were triggered, said Thomas Capalbo, a broker with Newedge in New York. These automatic buy orders are designed to limit losses by closing out a bearish position if the market moves above a predetermined price level.
“Everyone is looking at the same charts and the same indicators so people are going to put their stops in the same places,” Mr. Capalbo said.
Gold prices have been moving lower for several weeks, and some investors were choosing to lock in gains on their bearish bets ahead of the weekend, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.
“You have two days when the markets aren’t going to be open, and people are hesitant to keep large positions open in case something happens,” Mr. Haberkorn said.
Other bearish traders were likely forced to close out their positions before their losses stacked up too high, he said.
Moreover, next week is due to bring a string of U.S. economic data and the release of the Federal Open Market Committee’s minutes from its October meeting, giving investors fresh insight into the Federal Reserve’s October monetary policy decision. Gold doesn’t earn interest and costs money to store, making it unattractive should the Fed begin raising interest rates.