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MTECHTIPS:-Gold futures rally off the lows to trade 1% higher

MTECHTIPS:-Gold futures rally off the lows to trade 1% higher

Gold prices reversed earlier losses to trade higher on Monday, as investors closed out bets on lower prices, a move known as short covering. On the Comex division of the New York Mercantile Exchange, gold futures for February delivery rose 0.43%, or $5.00, to trade at $1,180.50 a troy ounce during U.S. morning hours. Futures fell by as much as 2.86% during Asian trading hours to hit $1,141.80 a troy ounce, the weakest level since November 7, after Swiss voters voted against a proposal requiring the Swiss central bank to boost its gold reserves. Had the motion been passed, it would have led to purchases of at least 1,500 metric tons of bullion over five years. Comex gold prices lost $22.00, or 1.84%, on Friday to settle at $1,175.50 an ounce. Futures were likely to find support at $1,130.40, the low from November 7, and resistance at $1,199.30, the high from November 28. Also on the Comex, silver futures for March delivery rallied 29.6 cents, or 1.9%, to trade at $15.85 a troy ounce. Prices tumbled to $14.42 earlier in the day, a level not seen since August 2009. Precious metals turned higher as the US dollar weakened against its major counterparts, as traders booked profits from the greenback’s recent rally. Gold prices are likely to remain vulnerable to further losses in the near-term amid indications a strengthening U.S. economic recovery will force the Federal Reserve to start raising interest rates sooner and faster than previously thought. Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise. Later in the day, the U.S. Institute of Supply Management was to release data on manufacturing activity. Elsewhere in metals trading, copper for March delivery slumped 0.5 cents, or 0.17%, to trade at $2.840 a pound. Copper slumped to a daily low of $2.779 earlier, a level not seen since June 2010, as market players digested a pair of reports on Chinese November factory activity, which provided more evidence of a slowdown in the world’s second largest economy. China’s manufacturing purchasing managers’ index slipped to an eight-month low of 50.3 this month, below expectations for a reading of 50.5 and down from 50.8 in October. The China HSBC final manufacturing PMI hit a six-month low of 50.0 in November, unchanged from a preliminary estimate and down from 50.4 the previous month.

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