Gold ends higher, option trade seen bullish

NEW YORK/LONDON – Gold rose nearly two per cent on Thursday in a rally sparked by a weaker dollar and a bleak economic picture, and the option market signalled bullion could rise further in the near term.

Investors in the COMEX gold option market were bracing for higher gold prices in the near term, traders said.
‘We have seen that the front-month (option contract) has been firming up a lot, which is usually a good indication that there is an upward move imminent,’ said Mihir Dange, a COMEX gold floor trader.
Spot gold was at US$842,20 an ounce up 1,6 per cent from the last trade of US$842,20 on Wednesday.
US gold futures for February delivery settled up US$12,80, or 1,5 per cent, at US$854,50 an ounce on the COMEX division of the New York Mercantile Exchange.
Gold’s subsequent break higher sparked a technical bounce, analysts said.
‘It looks like we get some support building in a $836 to $865 range. Every time we get down into the mid $830s, it bounces right up from there, h Dange said.
Gold’s strength on Thursday was largely driven by a lower dollar, which was weakened as falling stocks worldwide and weak sales at top US retailer Wal-Mart reignited worries about the global economic outlook.
‘The dollar has weakened, so in theory that should underpin gold, h Robin Bhar, a senior metals analyst at Calyon. -Nampa-Reuters