US GOLD CLOSE – Comex gold snaps three-day losing streak; returns to safe-haven roots

US GOLD CLOSE – Comex gold snaps three-day losing streak; returns to safe-haven roots.

New York 15/02/2012 – Comex gold outperformed many other commodity classes Wednesday as investors bought the yellow-metal to hedge against a further deterioration of the eurozone sovereign-debt crisis.

Gold futures for April delivery closed up $10.40, or 0.6 percent, at $1,728.10 an ounce. Trade ranged from $1,720.30 to $1,739.20.

“There were money flows out of the euro and into gold today – not the dollar,” broker Triland Metals said in a note.

“Safe-haven qualities trumped contagion fears and the precious metals took a bid all day. The dip provided by the nervous headlines from Europe were bought into,” Triland added.

Additionally, gold found support overnight after People’s Bank of China governor Zhou Xiaochuan pledged to maintain the central bank’s holdings of euro assets and invest in Europe’s bailout funds.

One of the major downside risks to gold remains the possible seizing-up of credit markets in the event of the default of one or more eurozone governments. Chinese assurances that it will use some of its massive dollar reserves to provide a liquidity backstop comforted traders and bankers.

In the eurozone, the EU and IMF are becoming increasingly hesitant to release 130 billion euros in new bailout funds to beleaguered Greece. There are now reports circulating that Eurogroup finance minsters might stagger or outright delay payments until after parliamentary elections in April. This increases the tail risk of a disorderly Greek default, which could happen as early as March 20.

In regional data, Italy, Germany and the Netherlands all reported negative growth in the final quarter of last year, while GDP for the region as a whole dropped. This wobbly sentiment pushed the euro lower by about a half cent to 1.3083 against the dollar.

“Mixed economic signals pared some early gains in gold and now European finance ministers are showing uncertainty, which is what the markets dislike the most,” George Gero, vice president at RBC Capital Markets, said.

“Right now there are more worries than answers and that’s pressuring the euro,” Gero said.

In US data, the Empire State Manufacturing survey for February rose six points to a one-year high of 19.5, beating a 14.7 forecast. But US industrial production was unchanged in January, with a gain of 0.7 percent in manufacturing offset by declines in mining and utilities.

Capacity utilization for total industry decreased to 78.5 percent, 1.8 percentage points below its long-run average.

As for the other precious metals, Comex silver for March delivery settled up six cents at $33.408 an ounce. Trade ranged from $33.315 to $33.975.

Platinum futures for April delivery on the Nymex were last up $4.30 at $1,632.20 an ounce, while the March palladium was at $682.30 an ounce, off $4.95.

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