Gold futures climbed toward the $1,600 level on Tuesday, with analysts attributing the rally to short covering following the metal’s range-bound trading over the past several sessions and losses year to date.
Marketwatch showed that Gold for April delivery rose $14.40, or 0.9percent, to $1,592.40 an ounce on the Comex division of the New York Mercantile Exchange. Over the last six trading sessions in a row, prices logged moves of 0.2 percent or less.
Gold has broken out of a tight range, so the day’s rally reflects “mild short-side covering” above the $1,585/$1,587 level and also fresh buying after prices failed to hold above the $1,565 support level for a third straight week on Friday, said Fawad Razaqzada, technical analyst at GFT Markets.
“This indicated that the sellers had enough, leading to the bulls coming back into bullion” despite evidence of continued outflows from gold exchange-traded funds, he said in emailed comments.
April gold had settled marginally higher on Monday. Last week prices edged up 0.3percent, though February marked the fifth-straight monthly loss for gold futures. They are down around 5percent so far this year, according to data from FactSet.
The speculative short positions this year are about 60 percent higher than they were last year when gold found support near $1,526 in May, said Gene Arensberg, editor of the Got Gold Report. Large speculators include hedge funds and commodity trading advisors