Commodity Trade Mantra | Oct 03, 2013 11:12AM ET
Gold recouped much of Tuesday’s peculiar flash crash losses and rose by 2.4% yesterday rebounding some $40 from a two month low at $1,278.24/oz earlier in the session. Deepening concerns about the government shutdown, poor jobs data and the growing risk of a U.S. default led to dollar weakness and a fall in equities.
In a reversal of Tuesday’s market, the S&P 500 index fell while safe havens such as U.S. Treasuries and gold rose and has consolidated on those gains overnight in Asia and in Europe.
Importantly, volume was higher than the previous day when prices fell sharply and volume was about 5% above its 30-day average, preliminary Reuters data showed.
Gold’s inflation hedge appeal was boosted after the European Central Bank’s chief, Mario Draghi, said the ECB is watching moves in market interest rates closely and is ready to do “whatever is needed.”
On Tuesday, gold futures posted their biggest daily percentage drop in more than two weeks, following a big Comex sell order and technical selling once prices fell below $1,300 an ounce.
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