Gold for April delivery GCJ3 +1.87% rose $20, or 1.3%, to $1,606.70 an ounce on the Comex division of the New York Mercantile Exchange. It had pulled back to around $1,590.50 shortly after the economic data were released, then bounced to a fresh session high of $1,609.60.
Silver for May delivery SIK3 +1.28% was also up 21 cents, or 0.7%, at $29.26 an ounce.
Federal Reserve Chairman Ben Bernanke testifies before Congress Tuesday.
Gold had rallied Monday to take back a portion of last week’s heavy losses. See: Gold futures score biggest gain of the month
U.S. consumer confidence and new-home sales numbers beat analysts’ estimates, dulling some safe-haven demand for gold, with prices seeing pressure immediately after the data were released.
Consumer confidence in February rose to its highest level in three months. See: Consumer confidence jumps in February.
New-home sales, meanwhile, rose 15.6% in January to an annual rate of 437,000, the highest pace of activity since July 2008. See: New-home sales jump to highest pace since mid-2008.
But precious metals tend to benefit during times of political and economic uncertainty, and with nearly all votes from the Italian election counted, the results indicated political deadlock.
A left-wing coalition looked set to win the lower house of the Italian parliament with a tiny majority, but an impasse appeared likely for the upper house. See: Italy’s lower house to go to Bersani coalition.
In the U.S., Fed Chairman Ben Bernanke delivered the central bank’s semiannual testimony to the Senate Banking Committee. He sent a strong signal that he backed the continuation of the central bank’s $85 billion bond-buying program. See: Bernanke says ‘QE’ benefits clear, risks manageable.
He will give his testimony to the House Financial Services Committee on Wednesday.
Bernanke’s testimony was “pretty much what the marketplace expected,” said Jim Wyckoff, senior analyst at Kitco.com, in an emailed note.
“The overall risk appetite in the marketplace appeared to uptick just a bit Tuesday morning, from that seen late Monday and overnight, which was a mildly bearish development for the gold market,” he said. “However, bargain hunters once again stepped in to buy the dip in gold, along with some more short covering and fresh safe-haven buying interest, to send prices back higher.”
Goldman bearish on gold
Gold was climbing even after a major investment bank made a bearish call on the metal. Goldman Sachs wrote in a note dated Feb. 25 that it was cutting its forecast for this year, saying the turn in gold prices that it expected for the second half of the year had come faster than expected.
The investment bank cut its three, six and 12-month gold-price forecasts, to $1,615 an ounce from $1,825, to $1,600 an ounce from $1,805 and to $1,550 an ounce from $1,800, respectively. Goldman said, though, that the “last leg lower in gold prices over the past two weeks” has been excessive. See: Goldman Sachs cuts 2013 gold price forecast.
Strategists at Capital Economics gave Europe’s debt situation as one reason to expect gold buying to pick up. They said they expected the metal to reach a record $2,000 an ounce this year, also aided by supportive global monetary policy and a fading equity rally.
“An extended pause is not a sufficient basis for arguing that the bull market is over,” they said.
Factors that have recently undermined gold include speculation of smaller asset purchases from the Fed, less demand for havens and a strong performance for income-paying assets such as equities, they noted.
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BP begins a high-stakes trial in federal court, Zynga shares are up on the news that New Jersey is moving toward legalizing online gambling in Atlantic City casinos and a study shows health benefits for the Mediterranean diet.
Gold was the biggest gainer among the precious- and base-metal commodities.
Copper for delivery in May HGK3 +0.25% tacked on 1.5 cents, or 0.4%, to $3.57 a pound.
April platinum futures PLJ3 +0.26% fell $7.10, or 0.4%, to $1,613.90 an ounce while palladium futures for delivery in June PAM3 -0.67% dropped $9.75, or 1.3%, to $741.50 an ounce. (MarketWatch)
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