The Azadi gold coin bounced off a ten-month low and advanced by 1.27 percent on Saturday, as Tehran’s market responded to the metal’s global jump on Friday.
Gold surged 2.5 percent on Friday to just shy of $1,200 an ounce as short-covering, fund buying and a sudden weakening of the dollar offset better-than-expected US data, which diminished demand for safe-haven metals, Reuters reported.
The upward move of gold coins in Tehran was lagging in momentum, as investors were cautioned not to get overenthusiastic. The volume of trade was low in Tehran’s bureaux de change, though higher prices are expected for Sunday, traders say.
“Investors are waiting for international markets to open,” said a bureau de change owner to the Financial Tribune. “International demand seems to be on the upside of the scale.”
Azadi, gold’s benchmark in Iran’s market, gained 115,000 rials and hit 9,155,000 rials, near a two-week high. Conversely, the dollar slipped 0.28 percent to 32,520 rials on international news.
For now uncertainty over the fate of Iran’s economy pending the country’s nuclear talks with the world powers looms large over domestic investors’ minds. A breakup of the talks could bring about a sharp drop in the rial, which has held its ground due to optimism on reaching an accord, some experts in Tehran argue.
The Central Bank of Iran is rather short on reserves, according to a bank expert. With falling oil revenues due to the sharp drop in crude oil prices in global markets, the central bank will be hard pressed if it has to defend the currency.
Friday’s Surge
Bullion bolted more than $40 to a two-week high at $1,193.34 in New York after dropping more than 1 percent in early trade to test the $1,145 level, where strong support was seen twice in the last four sessions, triggering pre-weekend short covering, Reuters reported on Friday.
At 15:00 GMT on Friday there was conspicuous spike in size and volume, with 25,000 lots traded in just ten minutes, and nearly half of the day’s December contract volume changing hands in just over 30 minutes.
“The early morning pressure was met with significant bargain-hunting, and when the market was unable to continue its move lower, short-covering ensued,” said David Meger, director of metals trading at Vision Financial Markets.
Gold tumbled early after the Commerce Department said US retail sales rose 0.5 percent in October, a sign American consumers were spending with more gusto and could help keep the economy growing at a brisk pace.
At 19:42 GM, spot gold was up 2.5 percent at $1,190.60 an ounce, a sharp rise from a low of $1,146.64 after the report.
US gold futures for December delivery settled up $24.10 at $1,185.60 an ounce, with trading volume about 60 percent above the 30-day average, preliminary Reuters’ data showed.
The dramatic gains put gold on track for one of its best days in months and up more than 1 percent for the week, its second straight increase.
Still gold’s long-term appeal is still in doubt. The US economy is outpacing others, and investors are betting interest rates there will rise faster. Rising rates weigh on gold as they lift the opportunity cost of holding non-yielding assets.
Investors pulled another 2 tons from the world’s top gold-backed exchange-traded fund, SPDR Gold Shares, in its eighth straight daily outflow, taking holdings to a six-year low of 720.62 tons.
Silver was up 4.4 percent at $16.28 an ounce, while spot palladium edged down 0.2 percent to $764.72 an ounce.
Platinum climbed 1.5 percent to $1,209.49 an ounce, having earlier touched a five-year low at $1,171.10.
This year, platinum has dropped 12 percent, while palladium climbed 7.4 percent. Gold has fallen 1.4 percent and silver has tumbled 16 percent.
