Gold rebounds as investors go bargain buying

08:31, July 21, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange bounced off on Tuesday, as investors came back to gold market after the price touched a 2- month low in the previous session. Silver and platinum both climbed.

The most active gold contract for August delivery climbed 9.8 dollars, or 0.8 percent, to finish at 1,191.7 U.S. dollars per ounce.

The Irish government successfully sold 1.5 billion euros of bonds in an oversubscribed auction on Tuesday, after Moody's Investors Service downgraded its credit rating from Aa1 to Aa2 on Monday, which has fueled investors' confidence in European fiscal health. Gold traded lower in the earlier session, pressured by the strengthened dollar as well as diminishing worries over eurozone debt problems.

The U.S. Commerce Department said on Tuesday that construction of new homes and apartments in June dropped 5 percent to a seasonally adjusted annual rate of 549,000, which is the lowest level since October. The sluggish data added to the evidences that U.S economy is recovering at a slow pace.

Meanwhile, the building permits application in June jumped 2.1 percent from a month earlier, according to the U.S. Commerce Department. Trader noted that the positive housing permit figure has added upward pressure on gold.

Gold price plunged to a 2-month low in the previous session, as a series of worse-than-expected U.S. economic data increased investors' expectation of deflation. The recent lower gold prices attracted purchases from jewelers as well as buying from bargain hunters, which were the main factors behind gold's rally on Tuesday.

September silver rose 15.0 cents, or 0.9 percent, to settle at 17.693 dollars per ounce. October platinum was up 4.7 dollars, or 0.3 percent, to settle at 1,517.8 dollars per ounce.



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