Media Quotes

Adam Sarhan Reuters Quote: PRECIOUS-Gold up on short covering, platinum in biggest gain since Oct

Thu, Dec 26 16:30 PM EST

* Gold, silver gain as traders cover short positions
* Prices head for biggest annual drop since 1981
* Platinum set for biggest daily gain in 2 months (Updates prices, adds comment)
By Clara Denina and Josephine Mason
LONDON/NEW YORK, Dec 26 (Reuters) – Gold gained nearly 1 percent in thin year-end holiday trade on Thursday on short covering, but was still set for its biggest annual loss in three decades as investors switch to rallying equities on optimism about a global economic recovery.
Signs that the U.S. labour market is improving – data on Thursday showed weekly jobless claims decreased 42,000 to a seasonally adjusted 338,000 last week – propelled the price of more industrial precious metals higher, with spot platinum rising almost 2 percent for its biggest daily gain since Oct. 17.
“Gold (is) looking better … as shortcovering and year-end buying back of hedges and previously sold contracts ensues with few around to offer with limited audience,” RBC Wealth Management said in an emailed comment.
U.S. gold futures for February delivery settled at $1,212.3 per ounce, up 0.75 percent on low volumes.
Spot gold rose as much as 0.9 percent to a one-week high of $1,215.7 an ounce, piercing a 9-day moving average.
Gains in equities and the U.S. dollar limited the market’s gains. A stronger greenback makes the dollar-denominated metal more expensive for holders of other currencies.
At 4:14 p.m. EDT (2114 GMT), it was up 0.5 percent to $1,211.91.
Bullion has found some “short-term support” after bouncing back from a six-month low of $1,185.10 hit last week following the Fed’s decision to begin tapering its massive stimulus program next month, said Adam Sarhan, president at Sarhan Capital, a New York-based financial advisory.
Traders betting the metal’s price would endure further losses were this week forced to cover their short positions, analysts said.
Gold is headed for a near 30 percent slump in 2013, ending a 12-year rally prompted by rock bottom interest rates and measures taken by global central banks to prop up the economy.
The decline this year is set to be gold’s biggest annual loss since 1981, while current prices are 37 percent below an all-time high of $1,920.30 hit in 2011.
Analysts and traders expect prices to drop further next year, but not to the same extent.
“Early next year we could test the $1,000 level but I don’t expect prices to decline as much as this year. From mid-year onwards, depending on economic data, there could be some recovery,” said one Hong Kong-based precious metals trader.
This year, a combination of a recovering global economy, rallying stock markets and stubborn low inflation in the United States have erased gold’s appeal as a safe-haven and as a hedge against rising prices.
U.S. stocks are on track to become the top investment in 2013, with the S&P 500 index on course to mark its best year since 1997.
Several brokerages such as Goldman Sachs, BNP Paribas and Societe General expect gold prices to drop below $1,150 in 2014.
Physical demand, which had climbed to peak levels earlier this year as gold prices fell sharply, has now cooled – lessening its support for prices.
Other precious metals also hit one-week highs. Silver rose 1.33 percent to $19.80 an ounce, having earlier touched its highest level since Dec. 18 at $20.02. The metal is however down 36 percent for the year, its worst annual performance since at least 1982.
Spot platinum was up 1.75 percent to $1,363.00 an ounce, rebounding from its lowest since early July at $1,309.75 a week ago. Spot palladium rose 1.0 percent to $703.0 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore and Josephine Mason in New York Editing by David Evans and Tim Dobbyn)