Gold rebounded from a four-week low after European Central Bank President Mario Draghi left the door open for further interest-rate cuts to bolster the economy, enhancing the metal’s appeal as an alternative investment.
Weakness will persist into next year, Draghi said today at a press conference after policy makers kept the benchmark rate at a record low of 0.75 percent. The ECB forecasts the economy will shrink 0.5 percent this year, more than the 0.4 percent contraction predicted in September. Gold fell 1.6 percent in the past two days.
“The possibility of an interest-rate cut is certainly supportive for gold,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Some of the liquidation we’ve seen may also have run its course, and people are buying against the lows.”
Gold futures for February delivery rose 0.5 percent to settle at $1,701.80 an ounce at 1:45 p.m. on the Comex in New York. Yesterday, the metal touched $1,686, the lowest for a most-active contract since Nov. 6.
Yesterday, holdings in exchange-traded products backed by gold climbed to a record for the 14th straight session, the latest data compiled by Bloomberg show.
Today, Morgan Stanley affirmed its call for gold as a top commodity pick for 2013 on demand from central banks and investors buying. Goldman Sachs Group Inc. said yesterday that the metal will probably peak in 2013 and decline the following year as U.S. economic growth accelerates.
Silver futures for March delivery advanced 0.5 percent to $33.114 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for January delivery gained 1 percent to $1,600.70 an ounce, the biggest increase since Nov. 23.
Palladium futures for March delivery climbed 1.4 percent to $697.05 an ounce.