Gold prices rebound as stocks slip
San Francisco (Jan 2) Gold prices rebounded in choppy trading Friday as equities stumbled in the wake of weaker-than-expected economic data, but the precious metal remained on track for a weekly loss.
Gold for February delivery GCG5, -0.02% rose $2.70, or 0.2%, to $1,186.80 an ounce, with volume thin at the end of the holiday season. Still, the bounce was impressive, coming off an earlier low of $1,167.30.
The rebound came as the stock market turned lower in the wake of a larger-than-expected decline in the Institute for Supply Management’s December manufacturing index, which declined to 55.5% from 58.7% in November. Economists had forecast a reading of 57%.
Gold and stocks have been demonstrating a “pretty strong inverse correlation” recently, said Peter Grant, senior metals analyst at Denver-based USAGOLD, in a phone interview.
While thin conditions are likely leading to exaggerating price moves, gold’s rebound off the lows demonstrates that strong buying interest continues to emerge on dips, Grant said.
Gold prices were previously undercut by a rise in the U.S. dollar DXY, +0.88% against major rivals, including the euro EURUSD, -0.74% as European Central Bank chief Mario Draghi signaled the bank is moving closer to launching full-scale quantitative easing.
A stronger dollar tends to weigh on dollar-denominated assets.
Gold futures are on track for a weekly loss of 0.7%, according to FactSet, which would mark the third consecutive weekly decline for the yellow metal. The last run of three straight weekly declines took place in late October through early September.
Gold futures finished 2014 with a 1.5% loss.
Elsewhere in the metals complex, silver for March delivery SIH5, +0.62% rose 20.1 cents, or 1.3%, to $15.80 an ounce. Platinum for April delivery PLJ5, -1.11% fell $7.20, or 0.6%, to $1,202.30 an ounce.
Palladium for March delivery PAH5, -0.28% lost 80 cnets to $797.60. High-grade copper for March delivery HGH5, -0.37% was off 0.1% at $2.828 a pound.