Resurgent gold turns in best day in a year

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Resurgent gold turns in best day in a year

Gold prices, which yesterday jumped the most in more than a year, may top $1,400 an ounce for the first time in six weeks after climbing above the 50-day moving average, according to technical analysis by Logic Advisors.

Gold futures in New York settled at $1,337.30 Monday, closing above the 50-day moving average near $1,336 for the first time since November. The pattern signals prices may rise 6.2 percent to $1,420 in the next few months, said William O’Neill, a partner at Upper Saddle River, N.J.-based Logic Advisors.

“The market is building up for a turnaround,” O’Neill said. “This could be the first clue that prices may see a reversal.”

Gold has rebounded 13 percent since reaching a 34-month low on June 28 as physical demand surged after the plunge. Imports by India may climb to more than 900 metric tons (992 short tons) in 2013 from 860 tons last year, and China’s purchases may top 1,000 tons, up from 817 tons, the London-based World Gold Council said July 17. Those countries are the world’s top bullion buyers.

Prices retreated 20 percent this year through Monday, wiping $57 billion from the value of holdings in exchange-traded products backed by gold, after some investors lost faith in the metal as a store of value.

The metal also fell on concern that the Federal Reserve would curb its stimulus program.

Hedge funds increased their net-long position by 56 percent to 55,535 futures and options in the week ended July 16, U.S. Commodity Futures Trading Commission data show. Short contracts fell the most since November after reaching a record a week earlier.

“Prices will continue to be supported by the short covering,” O’Neill said. Bloomberg

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