Gold Prices Make Modest Move Higher

Gold futures posted a modest gain Tuesday following a strong advance at the start of the third quarter.

Gold for August delivery  rose $1.30, or 0.1%, to $1,257 an ounce in electronic trade during Asian hours.

Gold on Monday had climbed $32, or 2.6%, on the New York Mercantile Exchange, bouncing off its dismal performance in the second quarter. Prices slid 23% during the April-June period, according to FactSet data, marking the worst quarterly decline since modern trading began in the mid-1970s.

Improvement in the U.S. economy — leading to speculation of a slower pace of monetary stimulus, gains for the U.S. dollar  and a sudden spike in U.S. bond yields — each played roles in gold’s price plunge, analysts have said.

While “we came into the year with a view that investors should maintain a benchmark weight to gold, we would now suggest trimming that position,” BlackRock’s global chief investment strategist Russ Koesterich told clients Monday in a review of its 2013 calls.

“As we’ve seen in recent weeks, with real (inflation-adjusted) interest rates rising, gold is particularly vulnerable,” he wrote, with real interest rates referring to the return on bonds minus inflation.

Barclays on Monday cut its gold-price forecast for this year to $1,393 an ounce, down from its previous outlook of $1,483 an ounce. Analysts there said additional weakness for gold prices came later in the second quarter than they had expected.

Goldman Sachs, Deutsche Bank, Morgan Stanley and HSBC are among the other banks that have recently downgraded their 2013 price projections for the precious metal.

More U.S. economic data are due out Tuesday, with economists polled by MarketWatch expecting a 1.9% pickup in orders for manufactured goods in May.

Also in the metals complex Tuesday, September copper   shed a penny to $3.15 a pound after hitting a two-week high on Monday.

September silver   rose 9 cents, or 0.4%, to $19.66 an ounce, extending Monday’s gain of 11 cents.

October platinum  fell $5.70, or 0.4%, to $1,376.80 an ounce. Platinum on Monday climbed by $42.60.

September palladium   fell 85 cents, or 0.1%, to $685.85 an ounce. The contract on Monday rose $26.

Source : Marketwatch