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Gold rebounds on short-covering


08:32, July 09, 2013

CHICAGO, July 8 (Xinhua) -- Gold futures on the COMEX division of the New York Mercantile Exchange futures settled higher on Monday, with the market recouping part of the 3 percent loss it suffered at the end of last week.

The most active gold contract for August delivery rose 22.2 U.S. dollars, or 1.83 percent, to settle at 1,234.9 dollars per ounce. Gold was seeing a corrective, short-covering bounce from Friday's strong losses, according to market analysts, while the metal also benefited from some safe-haven demand on Egypt unrest.

Investors on Friday lopped off 39.2 dollars, or 3.13 percent, from gold prices on worries the U.S. Federal Reserve later this year will start tapering its program of bond purchases, which has been a source of support for gold prices. The Fed's quantitative easing program has helped support the metal as quantitative easing tends to pressure the dollar and can lead to inflation. Gold is often seen as a hedge against inflation.

Barclays analysts said in a note Monday that physical demand for gold is softer and the prices are more likely to endure more downside, given the size of exchange-traded products. Barclays predicted gold prices will be around 1,200 U.S. dollars an ounce by the end of the third quarter and 1,393 dollars at year's end.

Exchange traded products holdings continue to bleed and are down 8 tonnes for the month of July so far. Total metal held in trust has fallen to 2,168 tonnes, the lowest since June 2010, and net redemptions have reached 593 tonnes for the year to date, wrote market analyst Suki Cooper at Barclays in a note, according to reports.

Silver for July delivery rose 30.2 cents, or 1.61 percent, to close at 19.038 dollars per ounce.

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