Gold advanced, recovering from the lowest level in a month, as Asian equities and oil rebounded after the twin risks of geopolitical tensions in the Middle East and Japan’s strongest earthquake shook investor confidence.
Immediate-delivery bullion rose 0.4 percent to $1,401.63 an ounce at 3:13 p.m. in Singapore, after slumping as much as 3.2 percent to $1,381.22 yesterday, the lowest level since Feb. 17. The April-delivery contract in New York added 0.6 percent.
“There’s some bargain-hunting after not only gold but commodities saw a sharp sell-off across the board as investors sought the safety of cash,” said Park Jong Beom, senior trader with Tongyang Futures Co. in Seoul. “A rebound in stocks also brought some relief to investors.”
The Standard & Poor’s GSCI Index of 24 commodity futures tumbled 3.8 percent yesterday, the biggest drop since July 29, 2009, on concern that a nuclear accident outside Tokyo may threaten the global economy. Asian stocks jumped 3 percent after a 5 percent decline yesterday, the most since November 2008, while oil in New York rebounded from a two-week high.
“Financial markets stay focused on Japan’s nuclear power crisis and the impact it could have on the global economy,” said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte. “While gold could be caught in a widespread sell-off of risk assets as investors convert holdings to cash, the safe- haven properties of gold could help support prices.”
A second fire in as many days broke out at a Japanese reactor hours after more quakes struck a country battling to avert a nuclear meltdown following last week’s 9.0-magnitude temblor and tsunami.
Bahrain Protests
The Saudi Arabian-led military intervention in Bahrain failed to end demonstrations in the island-kingdom, while in Libya, Muammar Qaddafi, appearing with a small group of supporters on state-run television, vowed to fight rebel “rats” and said “we are going to destroy them.”
“Geopolitical tensions are likely to continue to set the tone of trading in the near term,” Barclays Capital’s analysts including Gayle Berry wrote in a report yesterday. “We retain a positive view on gold as many of the long-term investment drivers remain intact amid low interest rates.”
The Federal Reserve yesterday reaffirmed its plan to buy $600 billion of Treasuries through June. In an upgrade of the central bank’s economic outlook, Chairman Ben S. Bernanke and his colleagues removed language that the recovery is “disappointingly slow” and that “tight credit” is holding back consumer spending.
Palladium for immediate delivery increased as much as 1.2 percent to $712.75 an ounce before trading at $705. The metal slumped 5.6 percent yesterday. Platinum dropped 0.8 percent to $1,685.73 an ounce, following a 3 percent loss. Cash silver rose 0.6 percent to $34.44 an ounce after sliding 4.7 percent. Prices touched $36.7525 on March 7, the highest since 1980.
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