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Gold was certainly hit hard over the weekend, but the metal was back with a vengeance on Monday morning. Prices rebounded by more than $35 to break the psychologically important level of $1,200 per ounce. As of 4:09 p.m. EST, gold was trading at $1,212.10 per ounce, up $36.90.
Update: Gold dipped just under $1200 on Tuesday morning, hitting $1,198.20 by 10:14 a.m. EST.
Gold was certainly hit hard over the weekend. The yellow metal fell to roughly $1,142 per ounce after Swiss voters rejected a proposal that would have forced the Swiss National Bank to repatriate its gold held abroad and increase its reserves of the metal to 20 percent of all central bank assets.
However, gold was back with a vengeance on Monday morning, with prices rebounding by more than $35 to break the psychologically important level of $1,200 per ounce. As of 4:09 p.m. EST, gold was trading at $1,212.10 per ounce, up $36.90.
Why the rebound?
According to Reuters, some are saying that gold’s gains can be chalked up to an overreaction to Sunday’s price drop — at least in part.
However, that’s not all that brought the yellow metal up. A downgrade for Japan’s sovereign debt from Moody’s sent the yen falling, stimulating additional gold demand. Simon Weeks, head of precious metals at the Bank of Nova Scotia, told the publication, “[t]he market had been focusing on the Swiss referendum, and the reaction to that was overdone on the downside. Then the Japanese rate cut caught a raw nerve.”
Beyond that, a rally in oil prices also stoked demand for the metal — oil futures were up by approximately 4.8 percent on Monday, as per Bloomberg. Tai Wong of BMO Capital Markets in New York told the news outlet, “[w]hat’s driving the gold market here is crude. The move is snowballing as recent short covering and micro-term momentum buyers go long.”
Not alone
To be sure, gold wasn’t the only metal to record a positive move on Monday. Both gold and silver futures saw big gains, with silver futures hitting $16.692 per ounce on New York’s COMEX. Meanwhile, platinum futures also rose to $1,241.60 per ounce.
Resource investors will no doubt be welcoming the positive change in the market, and will be watching keenly to see if the precious metals continue their strong performance through the week.
Company Gains
As would be expected, a number of gold companies did well on the back of Monday’s sharp rally.
IAMGOLD (TSX:IMG) dipped Friday from around $2.56 to a close of $2.24 — a loss of 13 percent. However, the company more than recouped those losses on Monday, adding just under 18 percent from Friday’s close to trade at $2.64. The company most recently made headlines when it cut its management team by 40 percent as part of wider cost-cutting measures.
Similarly, Timmins Gold (TSX:TMM) lost about 14 percent on Friday to trade at $1.05, but rose 12 percent on Monday, hitting $1.18. Likewise, Midas Gold (TSX:MAX) regained its 10-percent loss from Friday.
Monday’s other gainers spanned producers such as Kinross Gold (TSX:K) (up 9 percent) and Detour Gold (TSX:DGC) (up just under 11 percent), to mid-level producers Eldorado Gold (TSX:ELD) (up 9 percent) and Galane Gold (TSXV:GG) (up 11 percent), to juniors such as Continental Gold (TSX:CNL) (up 9 percent).
Securities Disclosure: I, Teresa Matich, hold no direct or indirect investment in any of the companies mentioned in this article.
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Gold Hits Three-week Low as Swiss Reject Gold Proposal, Rebounds Monday Morning