Gold ends higher as investors await EU summit
SAN FRANCISCO (MarketWatch) -- Gold prices rose Monday, as investors looked ahead to a European Union summit later in the week and read the metal's heavy losses last week as an opportunity to get back into the market.
Gold for August delivery (GCQ2) gained $21.50, or 1.4%, at $1,588.40 an ounce.
The gains follow a mildly positive Friday session that wasn't nearly enough to lift gold out of the red for the week. The contract ended the week off 3.8%.
"You've got some fear buying" as U.S. equities traded sharply lower, said Charles Nedoss, senior market strategist with Olympus Futures in Chicago. He also noted short-covering after last week's losses.
Investors were pessimistic the summit would result in concrete measures to stanch the debt crisis, which took the Dow Jones Industrial Average (DJIA) down more than 1.1% in recent dealings Monday.
The dollar traded stronger, which is typically a negative for oil and other commodities as it makes them more expensive to holders of other currencies. The ICE dollar index (DXY) recently rose to 82.468 from 82.267 late Friday.
In a weekend note, Societe Generale pointed to fading hopes for a breakthrough at the gathering of EU leaders that gets underway Thursday.
Meanwhile, Nomura Securities trimmed its gold-price target this year. But it kept its view of an overall positive environment, lifting its targets in 2014 and 2015 in what it said was a continuing uptrend in precious-metals prices.
Among the positives, Nomura noted central-bank buying, continuing strong Chinese demand, persistently negative real interest rates, and a growing bunker mentality for those investors who see dark scenarios on the horizon.
"The further deterioration of the economic recovery, enhanced potential for quantitative easing and continued structural problems in the euro zone lead us to believe that gold prices will stay stronger into 2014 and 2015,".Nomura analysts said in a research brief Monday.
However, the research house also said it sees gold prices coming up short of earlier estimates by year's end, revising its forecast to $1,754 an ounce, down from its previous price target of $1,791. It said one reason for the cut was lower-than-expected prices in the first half.
Other metals futures ended higher Monday, with copper turning to gains on the last stretch of floor trading.
July copper (HGN2) advanced less than 1 cent, or 0.3%, to $3.32 per pound.