Gold jumps more than 2 per cent on bargain hunting

Singapore: Gold jumped more than 2 per cent on bargain hunting on Monday.

Experts say that this could be due to a 9-per cent fall in prices last week, a recovery in crude oil prices and a weaker dollar against the euro.

The combination seems to have given investors enough reasons to step in.

Gold's strength spurred gains in other precious metals.

Platinum rose almost 5 per cent despite poor outlook as the global financial crisis and weaker economic growth in the United States forced automakers to slash output.

Gold was trading at $794.30 an ounce, up $12.80 from New York's notional close on Friday, when it hit a low of $771.30, as a lack of confidence in the financial system and a dollar rally ignited heavy liquidation by commodity funds.

Gold has lost about 23 per cent from its lifetime high of $1,030.80 struck in March.

"Gold prices certainly look much lower now, as compared to a week ago and I guess some people will be looking at picking some. I am not convinced that the selling is over. That's more from a technical view," said Adrian Koh, analyst at Phillip Futures.

"From what I noticed in the open interest, it seems like it is steadily moving lower from the peaks around the middle of the year, and with prices heading towards the downside, it simply means that funds and investors are moving money out of the markets."

Noncommercial investors, or speculators, were net long on 106,825 contracts of gold futures traded on the New York Mercantile Exchange's COMEX metals division in the week ended Oct. 14, down from 111,613 contracts in the week to October 7.

"It simply means the large speculators are reducing their net longs. It also means that less large speculators are bullish on the market as compared to previous weeks," said Koh.

"Nearby support will be around the $780 region. The market now is above those regions, so if we do hold above those regions, we should see a bit of consolidation around those regions," he said.

Oil gained more than $1 to above $73 a barrel on expectations OPEC could cut output at an emergency meeting this week.

Oil prices have fallen more than 50 per cent from their peakabove $147 a barrel. The euro rose to $1.3456 against the dollar.

Platinum was trading at $885.00 ounce, up $34.50 an ounce from New York's notional close, having fallen to $831.50 an October 16, its weakest since December 2004, as fears of a global recession threatened to cut demand for autocatalysts.

J.D. Power and Associates, which tallies U.S. auto sales on a daily basis, sees October sales on track to hit the lowest level in 17 years with a sales rate below 12 million units. More than 60 per cent of global platinum use goes to autocatalysts to clean exhaust fumes.

It hit a record high of $2,290 in March on supply worries following a power crisis in main producer South Africa.

New York gold futures rose $9.0 ounce to $796.8. Precious metals prices at 0215 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 794.30 12.80 +1.64 -4.61 Spot Silver 9.63 0.26 +2.77 -34.80 Spot Platinum 885.00 34.50 +4.06 -41.78 Spot Palladium 173.00 3.50 +2.06 -52.99 TOCOM Gold 2595.00 -9.00 -0.35 -15.20 24246 TOCOM Platinum 2929.00 134.00 +4.79 -45.14 8332 TOCOM Silver 312.30 -0.80 -0.26 -42.27 311 TOCOM Palladium 591.00 14.00 +2.43 -56.25 317 Euro/Dollar 1.3451 Dollar/Yen 101.59 TOCOM prices in yen per gram, except TOCOM silver which is priced in yen per 10 grams. Spot prices in $ per ounce.