By Barani Krishnan
Investing.com - Gold prices jumped more than 2% on Monday, briefly recapturing the $2,000 an ounce perch for the first time in nearly a week, as a renewed drop in Treasury yields pushed investors back toward safe-havens.
It was a remarkable turnaround for an asset that just about a week appeared to have lost its proverbial “golden touch”.
Gold’s “Black Tuesday” from last week wiped 5%, or $93, from the most-active gold futures contract on New York’s Comex, after an intraday swing of $129. It was Comex gold’s worst one-day loss in seven years. Since then — and until Monday — trading in the yellow metal had been a game of pure nerves or, at best, high-powered chess.
With Monday’s rally, some analysts still weren’t sure if gold’s rally mode will stay without much of a give-back. The latest peak in December gold was almost $90 off its record high of nearly $2,090 from last week. Many gold bulls have a target of between $2,100 and $2,300 for gold over the next two months.
Benchmark December gold futures on Comex settled up $48.90, or 2.5%, at $1,998.70 after an intraday peak at $2,000.35. It was the first time gold had scaled $2,000 since the Black Tuesday-rout. The percentage gain on the day itself was the highest since April 22.
The spot price of gold, which reflects metal for immediate delivery, lagged the gains in futures, rising by $36.04, or 1.9%, to $1,980.53 by 2:48 PM ET (18:48 GMT).
“Today, gold has broken past all immediate upper targets in finding its way from a low of under $1,940 to highs of just above $2,000,” said Sunil Kumar Dixit,” an independent chartist for the precious metal.
“Yet, it’s possible that it may consolidate and trade range-bound unless it finds strong triggers to move higher,” Dixit said.
Those triggers will primarily be yields on the U.S. 10-Year Treasury note and the performance of the U.S. Dollar Index.
Yields on the 10-year note initially plunged 5% on Monday, before recovering to show a deficit of 3.8% late afternoon in New York.
The dollar index, which pits the greenback against a basket of six currencies, was down to as low as 92.75 earlier in the day before stabilizing to 92.85.
Some news reports suggested that gold may have also drawn additional interest on Monday from evidence that top investor Warren Buffett has dipped his toes into gold mining stocks. A public filing of Warren Buffett’s Berkshire Hathaway Inc . (NYSE:BRKa) revealed that the conglomerate had taken a new stake last quarter in the world’s second-largest gold miner, Barrick Gold (NYSE:GOLD) Corp.
Silver, the second top draw in precious metals, also got a ride up Monday on the back of the gold rally.
September, the front-month silver contract on Comex, settled up $1.58, or 6%, at $27.67 per ounce. September silver hit a seven-year high of $29.915 last week, coming just short of the $30 targeted by many longs in the white-metal.