Gold Falls, But Futures Look Bright

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Gold futures rose to the highest in more than 6 weeks as declines in equity markets revived demand for the metal as a haven.

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More than $100 billion was wiped from the value of world equity markets yesterday, and global shares are falling again today. Bullion extended gains as the dollar headed for the biggest loss in two months against a basket of 10 currencies.

Gold has rebounded almost 9% since reaching a four-year low last month.

Signs that central banks in Europe and Asia will increase money supplies have reignited the metal’s appeal as a store of value. Swings in oil prices are increasing bullion’s volatility as traders judge the outlook for inflation.

“There are equity market concerns and an increase in the flight away from risky assets to quality,” James Steel, an analyst at HSBC Securities (USA) Inc. told Bloomberg News in a telephone interview. “Gold seems to be benefiting from that more than anything else.”

Gold futures for February delivery climbed 3% to $1,230.50 an ounce at 11:53 a.m. on the Comex in New York, after touching $1,239, the highest since Oct. 23.

Following two days of increases, the price of Chinese gold bullion dropped by 16.6% to end at CNY 236.40 ($38.44) per gram on Monday, December 8. The price of US gold bullion declined 1.1% to $1,193 per ounce. Japanese gold bullion prices rose 0.2% to JPY 4,659 ($38.32) per gram. The price of Indian gold bullion remained essentially flat at INR 26,730 ($431.42) per 10 grams.

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US silver prices saw a 1.3% decline to $16.28 per ounce. After a 1.2% increase, Indian silver finished the day at INR 38,001 ($613.33) per kilogram. At JPY 630.00 ($5.18), the price of Japanese silver finished the market day up 0.5% per 10 grams. Chinese silver ended the day at CNY 3,485 ($566.71) per kilogram, after the 0.4% drop yesterday.

Japanese platinum bar gained 1.4% to finish at JPY 4,780 ($39.31) per gram. After improving for two days, the price of US platinum bar declined 0.6% to $1,227 per ounce. The price of Chinese platinum bar steadied at CNY 259.00 ($42.12) per gram following two-days of increases.

Following a couple of essentially changeless days, the price of Japanese palladium bar rose by 3.4%, closing at JPY 3,235 ($26.60) per gram. Chinese palladium bar prices rose 0.6% to CNY 177.00 ($28.78) per gram. US palladium bar saw its price rise 0.3% to $798.00 per ounce.

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