Gold Prices Rise as Stocks Pause

New York (Nov 14)  Gold prices pushed higher on Friday as some bearish traders moved to lock in gains on this week’s declines and a weaker stock market burnished the metal’s allure to price-sensitive buyers.

The most actively traded contract, for December delivery, was recently up $12.30, or 1.1%, at $1,173.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold’s move higher comes at a time when many investors had wagered on prices to fall, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago. Some of these investors are repurchasing gold to lock in gains on the past month’s losses ahead of the weekend, he said.

“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.

Gold’s climb higher is also being helped by stop-loss orders, or automatic trading orders that close out a position before it becomes unprofitable.

A retreat in U.S. equities also gave gold prices a boost. The S&P 500 index was recently down 21 points to 2037, while the Dow Jones Industrial Average eased 0.1% to 17635.

Stocks have rallied to record highs throughout 2014, putting a damper on gold’s allure as a haven. Investor appetite for protection tends to wane when riskier assets like equities are performing well.

However, Friday’s respite in the stock rally allowed some investors to turn their sights back to the gold market, where some bought the metal at prices only slightly above four-year lows.

“The swift move to the downside (in gold) was met with bargain hunting,” said Dave Meger, director of metals trading with Vision Financial Markets in Chicago.

Source:  WSJ