Gold Slightly Higher, Aided By Overnight Physical Buying...

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U.S. gold futures are modestly higher early Friday after physical buying continued in overseas activity, traders said. The metal is up for the second straight day to start 2014, after getting a lift Thursday from buying related to rebalancing, softer equities, physical demand and a continuation of short covering that began hours before trade ended in 2013.

As of 8:07 a.m. EST, gold for February delivery was $3.90, or 0.3%, higher to $1,229.10 per ounce on the Comex division of the New York Mercantile Exchange. March silver was nearly flat, dipping 0.8 cent to $20.12.

“So far, we’re seeing a bit of interest on the physical front,” said Afshin Nabavi, head of trading with MKS (Switzerland) SA. “When the market Tuesday went (nearly to) $1,180, a lot of physical buying came out of the woodwork. We continue to see some interest.

“And, of course, the market is more short than long. So every time we hit an important resistance point, some stop buying comes into the market.”

Another trader suggested some nervous shorts might be starting to cover positions in anticipation of buying ahead of Chinese New Year celebrations that start at the end of the month.
Gold hit a two-week high on Thursday, then extend it Friday. The February contract peaked at $1,238.30 an ounce, its most muscular level since Dec. 18.

Janet Mirasola, managing director of metals for Wells Fargo, said gold is bucking a trend in which many markets area were softer overnight – including Asian equities and base metals. Gold is showing “a glimmer of its old ‘safe haven’ self,” she said.

Technically, February gold has moved back above the 20-day average of $1,123.40 and put in some distance above the 10-day average of $1,208.50. The 50-day average lies at $1,261.80.

A key event Friday, Mirasola said, will be speaking appearances by a number of Federal Reserve officials at American Economic Association event in Philadelphia. The lineup will include Philadelphia Fed President Charles Plosser at 12:45 p.m., Fed governor Jeremy Stein at 1:15 and Fed Chairman Ben Bernanke at 2:30. More Fed speakers are scheduled for over the weekend.

Otherwise, the only U.S. economic data on the calendar Friday are motor-vehicle sales.

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News Source: www.bloomberg.com