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Gold, silver start off the new year with strong gains

Published 01/02/2014, 03:38 AM
Updated 01/02/2014, 03:38 AM
Gold, silver start off 2014 with strong gains

Gold, silver start off 2014 with strong gains

Investing.com - Gold and silver prices rallied sharply on Thursday to kick off the new year with strong gains as investors returned to the market to seek cheap valuations in wake of recent losses.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,220.40 a troy ounce during European morning trade, up 1.5%. Gold prices rose by as much as 2.1% earlier in the day to hit a session high of USD1,228.10 a troy ounce, the strongest level since December 18.

Futures were likely to find support at USD1,181.40 a troy ounce, the low from December 31 and resistance at USD1,243.90, the high from December 18. There was no floor or electronic trading on Wednesday because of the New Year’s Day holiday.

Gold prices ended 2013 with a loss of nearly 29%, its first annual decline since 2000 and the worst in 32 years, as solid U.S. economic data underlined expectations the Federal Reserve will begin curbing stimulus.

Meanwhile, silver for March delivery rallied by as much as 5.2% earlier in the session to hit USD20.43 a troy ounce, before moving off the highs to trade at USD19.95, up 3%. Comex silver prices lost nearly 36.5% in 2013, making it one of the worst performing commodities of the year.

Market players looked ahead to U.S. data on manufacturing activity and weekly jobless claims later in the day, to gauge if the U.S. economy will be strong enough to allow the Fed to continue withdrawing support through 2014. The U.S. central bank will reduce its bond-buying stimulus program by USD10 billion a month starting in January.

Some market participants believe the Fed will likely taper its bond purchases by USD10 billion in each of its next seven meetings before ending the program in December 2014, amid indications of an improving U.S. economy.  

Elsewhere on the Comex, copper futures for March delivery rose 0.55% to trade at USD3.415 a pound, the highest level since April.

Copper prices have been well-supported in recent weeks amid indications the U.S. economic recovery is deepening. The U.S. is second behind China in global copper demand.

Trading volumes are expected to remain light on Thursday due to the holiday period, reducing liquidity in the market and increasing volatility, which can help exaggerate market moves.

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