Gold Rebounds From Two-Month Lows

Gold futures on Wednesday clawed back a small chunk of their big losses in the prior session, as the reality of the U.S. government shutdown sinks in and the potential debt-ceiling debacle looms on the horizon.

In electronic transactions, gold for December delivery  was up $6.80, or 0.5%, to $1,292.90 an ounce.

A day earlier, gold futures gave up more than $40 an ounce to slide to their lowest settlement in almost two months. Concerns over whether the federal shutdown would be short-lived sapped demand for the perceived safe haven. On Monday, gold nailed down its first quarterly gain this year.

Fitch Ratings added to gold’s pain on Tuesday, saying a rebound for gold over the next few years is unlikely owing to unwinding of U.S. quantitative easing and expectations of “improving, but unspectacular growth.”

Fitch said its ratings of gold producers involves a base-case price assumption of $1,200 per troy once for the next few years. However, the ratings firm said it really doesn’t see that as a price floor “because recent price trends have been influenced far more by the use of gold as a financial instrument and a hedge against inflation than by industrial demand.

“Given the change in sentiment as central banks signal unwinding of economic stimulus, we recognize it is possible that the gold price could find a new floor below this level for an extended period,” said Fitch, saying one stress scenario that sees gold falling to $1,000 an ounce would put some gold miner’s ratings under “significant pressure.”

Lear Capital Chief Executive Scott Carter said now would be a good time for investors to consider bringing gold and silver allocation to at least 5% of a diversified portfolio.

“It’s dangerous to draw any conclusions on a one-day move; however, equities are rising today…another ‘bad news is good news’ day,” he wrote in emailed comments. “Any event the ensures the Fed will keep printing money is deemed a positive by equities.”

As for silver, the December contract  edged up just a penny, or 0.1%, to $21.19 an ounce. Silver lost 7.7% for the month of September, and rose 11.5% for the quarter, based on the most-active contracts, FactSet data showed.

January platinum  rebounded $3.80, or 0.3%, to $1,389.10 an ounce. December palladium   rose 90 cents, or 0.1%, to $719.80 an ounce. Copper for December delivery was mostly flat at $3.27 a pound.

Source : Marketwatch