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Gold Climbs, but Upside in Doubt With Price Under $1,200

Published 10/09/2018, 01:54 PM
Updated 10/09/2018, 02:20 PM
© Reuters.  Gold rebounded slightly.

Investing.com - Gold rebounded slightly Tuesday, as the recent jump in U.S. bond yields and persistent concerns over global growth sparked an investor flight toward safe-havens.

But futures for the yellow metal remained below the $1,200 level that's critical to the confidence of gold bugs, raising questions on its potential upside after Monday’s 1.4% tumble, the sharpest selloff in a day since Aug. 13.

“While the gold market eventually rejected a large portion of the initial washout, the damage on the charts was significant and the tone of the market might be damaged so much that further liquidation is expected directly ahead,” ADM Investor Services said in its outlook on the precious metal.

Gold futures for December delivery were up $2.10, or 0.2%, at $1,190.70 per troy ounce by 1:48 PM ET (17:48 GMT) on the COMEX division of the New York Mercantile Exchange. It earlier settled the session at $1,191.15, up $2.90, or 0.2%, on the day.

The gains came as equity markets grappled with the moves in U.S. Treasury yields. The 10-Year Treasury note's yield surged to a fresh seven-year peak earlier Tuesday, spurred by expectations for a potentially faster pace of rate hikes from the Federal Reserve. But the yield gave back those gains and more later in the day.

On Monday, December gold settled at $1,184.40, its lowest close since Sept. 28, as the dollar rebounded amid the closure of U.S. bond markets for the Columbus Day holiday.

Gold also benefited on Tuesday from an increase in risk-aversion after the International Monetary Fund cut its global growth forecast, warning that trade conflicts are starting to have a serious impact on the global economy.

The IMF downgraded its outlook for the U.S., China, the euro zone and the UK, saying it now expects the global economy to expand by just 3.7% in 2018 and 2019, down from 3.9% before.

Elsewhere on COMEX precious metals trading, December silver advanced 0.5% to $14.44 per troy ounce. January platinum was trading up 1.2% at $828, while December palladium fell 0.5% to 1,063.60.

Among base metals, December copper rose 1.6% to $2.812.

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