Gold jumps more than 1 pct in sudden short-covering bounce
New York (Nov 14) Spot gold rallied more than 1 percent on Friday as investors raced to cover bearish bets after breaking through key support at $1,150 per ounce and as the U.S. dollar pared gains even after better-than-expected U.S. data.
Bullion had dropped more than 1 percent to below $1,150 an ounce but bolted $30 midmorning in New York as the dollar moved off four-year highs, triggering a burst of short-covering.
The 10 a.m. EST (1500 GMT) spike was conspicuous in size and volume, with 40 percent of the day's December contract volume changing hands in just over 30 minutes.
"Once it got back to $1,150, that was an excuse for a short-covering rally," said Simon Weeks, head of precious metals at the Bank of Nova Scotia.
The Commerce Department said U.S. retail sales rose 0.5 percent in October, a sign American consumers were spending with more gusto and could help keep the economy growing at a brisk pace.
At 11:00 a.m. EST, spot gold was up 1.2 percent at $1,176.68 per ounce, up from a low of $1,146.64 after the report. U.S. gold futures for December delivery were up 1.2 percent at $1,175.3 an ounce.
Still, gold was set to fall for a third week in four, suffering from perceptions that the U.S. recovery is outpacing that of other economies.
That has led to bets that U.S. interest rates will rise faster than others. Rising rates weigh on gold as they lift the opportunity cost of holding non-yielding assets.
Holdings of the world's top gold-backed exchange-traded fund, SPDR Gold Shares, fell 2 tonnes on Thursday, the eighth straight day of outflows, to a six-year low of 720.62 tonnes.
Silver was up 1.8 percent at $15.88 an ounce, while spot palladium was up 0.13 percent at $769 an ounce.
Spot platinum was up 0.19 percent at $1,199.5 an ounce, having earlier touched a five-year low at $1,172.80.