Gold Ends Below $1,587 Amid Italy Election Drama
Gold rose on Monday on increasing hopes of a technical rebound after its recent sell off, and as euro zone fears related to an uncertain outcome for Italy's election lifted safe-haven buying.
Bullion climbed near $1,600 an ounce after early forecasts of Italy's election results raised the spectre of deadlock in the debt-laden country's parliament that could reignite the euro zone crisis. Global equities fell on the news.
Investors added gold positions on hopes of a rebound after hedge funds and money managers had cut their net long U.S. gold futures and options positions to a four-year low, as improving market confidence globally and a Wall Street rally had hit gold's appeal.
"Gold had a 'near-term bottom-out' here. We had a steep selloff in the last few weeks," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank. "We think there is a near-term opportunity for a bounce up," Florance said.
Spot gold rose nearly one percent to $1,595 per ounce, still below key short-term resistance near $1,600. The metal hit a seven-month low of $1,554.49 last Thursday.
U.S. gold futures ended the session up $13.80 at $1,586.6 per ounce, with trading volume about 20 percent below the 250-day average, preliminary Reuters data showed.
The market will now focus on Federal Reserve Chairman Ben Bernanke's semiannual testimony to Congress on Wednesday for more clues about U.S. monetary policy. Overall confidence in gold remained fragile, however, with holdings of the SPDR Gold Trust falling 42.3 tonnes to 1,280.67 tonnes last week, its largest weekly outflow since August 2011.
In other precious metals, spot platinum last rose 0.2 percent to $1,608 an ounce, after prices fell 3 percent to a five-week low of $1,593.45 on Thursday. Palladium was up 0.80 percent at $742 an ounce, having fallen to a one-month trough of $707.22 last week.
Spot silver rallied by more than two percent higher to trade near $29 an ounce.