Good fund buying boosts gold price ahead of financial summit
Gold futures ended more than 5 percent higher on Friday as heavy buying by funds triggered buy stops ahead of the Group of 20 summit meeting, which could set a positive tone for the bullion market."Gold was oversold, and there was good fund buying in the gold pit at market opening," said Jonathan Jossen, COMEX gold options floor trader in New York.Spot gold was at $746.65 at 2:22 p.m. EST (1922 GMT), up 1.6 percent from Thursday’s close of $734.30.U.S. gold futures for December delivery settled up $37.50, or 5.3 percent, to $742.50 an ounce on the COMEX division of the New York Mercantile Exchange."Gold jumped after the start of COMEX trading," said Tom Kendall, precious metals strategist at Mitsubishi Corp. "It was very quiet ahead of the U.S. rally and people are waiting to see if anything positive will come out of the G20 meeting.Bullion ended the week about $10 higher compared with its last Friday’s close of $735.95 as investors covered short positions after prices teetered just above $700 an ounce on Thursday.After the dip yesterday and late U.S. trading, we are back where we started the week really," said Kendall.Gold rebounded from earlier lows, which were a result of lower oil prices and a stronger dollar, but trading was rangebound ahead of the weekend summit of industrialized and emerging nations on the global financial crisis.Analysts said that bullion investors positioned themselves for possible favorable news from the G20 summit that could pause the dollar’s resurgence and bolster gold.The dollar has been rising as the market have flocked to U.S. Treasury bills since August when markets realized the financial crisis and economic slowdown could lead to a global recession.The euro zone economy fell into its first technical recession in the third quarter, boosting expectations that the European Central Bank would cut interest rates in December.However, dealers said they expected steady physical buying from India, the world’s main gold consumer, would also aid prices during the traditional wedding season, which runs until early 2009.Platinum fetched $838.00, up 2 percent from Thursday’s finish.Prices of the metal used to make autocatalysts have plunged about 64 percent since a record high of $2,290 hit in March.Johnson Matthey, the world’s top platinum refiner and fabricator, will release its keenly awaited interim review on Tuesday."Johnson Matthey has the potential to influence the price of platinum and palladium in the sort term," said Kendall.Palladium fetched $212.50, up 1.2 percent from its previous close, and silver was at $9.51, up 1.4 percent from Thursday’s close.