New York 04/01/2012 - Gold on the Comex division of the New York Mercantile Exchange ended higher Wednesday on safe-haven demand generated by rising Middle East tensions.
Gold futures for February delivery closed up $12.20, or 0.8 percent, at $1,612.70 an ounce. Trade ranged from $1,593.80 to $1619.80.
The yellow-metal made it's biggest gains following reports that a preliminary agreement was reached on a ban of Iranian imports of crude oil to the EU.
“The fundamental fear factor of Iran's threats on oil serves to remind investors that there's strife beyond the eurozone and its economic problems,” George Gero, vice president with RBC Capital Markets, said.
From a technical perspective, Gero said that gold continues to retrace the losses incurred in late December.
“Today, we had a trifecta for momentum traders - higher volumes, higher open interest and a higher close,” he added.
Gold also managed post solid gains even though the euro slid back below 1.30 against the dollar and while equity markets were weaker-to-flat.
This could mark the beginning of a trend reversal, sources said. In recent months, gold has behaved like a risk asset by closely tracking equity prices and maintaining an inverse correlation with the dollar.
“Precious metals were well bid today amidst geopolitical tensions with equities and base [metals] off,” broker Triland Metals said.
“Gold held up pretty well considering a sliding euro, breaking away of its correlation for now,” said Triland, adding that gold could soon challenge the 200 day moving average at $1,625.
Datawise, US factory orders for November fell short of expectations, rising 1.8 percent against a forecast 1.9 percent, but the reading was better than that of the previous month, when orders declined 0.4 percent. The next main event is the US non-farm payrolls report on Friday.
Tomorrow, attention will shift to the long-term bond sale of between 7-8 billion euros in France, while Spanish and Italian auctions will follow next week.
As for the other precious metals, Comex silver for March delivery settled down 47.5 cents at $29.097 an ounce. Trade ranged from $28.900 to $29.740.
Platinum futures for April delivery on the Nymex closed up $27.60 at $1,432.50 an ounce, while the March palladium contract ended at $663.50 an ounce, at $7.35.
(Additional reporting by Clara Denina)