Gold Prices Rise Amid Short-Covering (Update 1)
Updated from 10:58 a.m. EST with video interview and settlement prices
NEW YORK (TheStreet) -- Gold prices rose Tuesday as investors took to short-covering on the yellow metal.
Gold for February delivery rose $7.90 to settle at $1,660.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,665 and as low as $1,653.50 an ounce, while the spot price was tacking on $8.50, according to Kitco's gold index.
"Thousands of contracts of 1700 strike puts were in the money and so short covering ensued this morning to re-align portfolios," George Gero, precious metals strategist at RBC Wealth Management, wrote in a note on Tuesday. Gero also said in a phone interview that Monday's report of December durable goods orders, which came in better than expected, suggested the economy has been on the mend -- a signal that more buying could be somewhat inflationary in the near term.
Silver prices for March delivery gained 40 cents to close at $31.18 an ounce, while the U.S. dollar index was dipping 0.24% to $79.57.
Gold investors were looking ahead to a busy week for the precious metal as the Federal Reserve releases its Federal Open Market Committee meeting announcement. Traders will be looking for any new language about the length of time for continuation of quantitative easing programs.
Friday marks the first day of February, which means the Bureau of Labor Statistics will report the January unemployment rate and nonfarm payrolls. With the Fed's low-interest rate policy tied to a 6.5% unemployment rate target, gold investors will be watching for any dip in the current 7.8% rate to gauge how much longer they expect the central bank to continue monetary stimulus.
The Institute for Supply Management's manufacturing Index is released on Friday. Any improvement in the report would suggest continued progress in economic recovery, which could be negative for gold prices.
-- Written by Joe Deaux in New York.
>Contact by Email.