April 2, 2012, 2:11 p.m. ET
Article from The Wall Street Journal
-- Comex June gold up 0.5% to $1,679.70
-- Funds favor gold amid second quarter asset allocation
-- Gold strengthens as dollar moderates against other currencies
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Gold futures settled higher Monday, drawing strength from new inflows of investment funds at the start of the second quarter as well a steady dollar.
The most actively traded contract, for June delivery, settled up $7.80, or 0.5%, at $1,679.70 a troy ounce on the Comex division of the New York Mercantile Exchange.
An inflow of investment funds stirred up gold prices. Fund managers flocked to the precious metal market with second quarter allocations on the first day of the new quarter.
The yellow metal locked in a 6% gain in the first quarter, and "performance seems to continue to attract investors," said George Gero, vice president with RBC Capital Markets Global Futures.
"Everybody is hoping you're going to do better and more money is coming in," he said.
Gold prices were also helped by a mixed performance by the dollar, which gained against the euro but retreated versus other major currencies. The ICE Dollar Index was recently at 78.877, from 78.949 late Friday.
Gold's rally was muted, however, as many buyers in India remain on the sidelines amid strikers over a gold import tax hike introduced last month. India is the world's largest importer of physical gold but many jewelers there have shut shop in protest over doubling gold import duties to 4%.
"The speculative trade is still concerned about the potential slackening of physical gold demand from key consuming nations such as India...and about waning investment demand," said Jon Nadler, Senior Metals Analyst at Kitco Metals Inc. North America, in a note.
Chinese market participants were also absent from the gold market overnight as the three-day Tomb Sweeping holidays began there.
"A quiet overnight in Asia, with Chinese players out for the next three days, saw gold come under some pressure," said Marc Ground, metals analyst with Standard Bank, in a note.
Traders in China are due to return to the precious metals market Thursday.
Elsewhere, Bank of America Merrill Lynch cut its 2012 gold outlook Monday. The bank now expects gold prices to average $1,750 a troy ounce, down 5.4% from its previous forecast of $1,850 a troy ounce.
Despite the downgrade, the bank maintained its $2,000 a troy ounce 12-month price target.
"The likely deceleration of US growth, a potentially pro-active Federal Reserve and continued negative real interest rates in a host of nations suggest we are on track to reach our $2,000/oz price target in the next 12 months," Bank of America Merrill Lynch metals strategist Michael Widmer said in a note to clients.
Other precious metals also finished higher on the day. Silver for May delivery settled up 1.9% at $33.098 an ounce, while July delivery platinum gained 0.7% to end at $1,654.90.
"Silver-based ETFs added 22.6 tonnes to their holdings, [but] the futures market remains unconvinced about silver's near-term price prospects. A similar lack of confidence appears to be on display in the platinum market, judging by the sharp decline in the metal's net speculative length in the week ending last Thursday," said Kitco's Nadler.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,677.50; previous PM $1,662.50
June gold $1,677.50, up $7.80; Range $1,664.40-$1,685.40
May silver $33.098, up 61.4 cents; Range $32.340-$33.250
July platinum $1,654.90, up $10.80; Range $1,640.50-$1,659.90
June palladium $658.80, up $4.70; Range $651.50-$666.10
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
Article from The Wall Street Journal
