Gold futures rally to 2-week high on surging physical demand

Investing.com - Gold futures extended the previous session’s strong gains on Thursday to hit a two-week high, as prices remained supported amid indications of surging demand for the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,442.05 a troy ounce during European morning hours, up 1.3% on the day.

Comex gold prices rose by as much as 1.5% earlier in the session to hit a daily high of USD1,447.35 a troy ounce, the strongest level since April 15.

Gold prices were likely to find support at USD1,385.70 a troy ounce, the low from April 19 and resistance at USD1,457.60, the high from April 5, 2011.

The U.S. Mint has sold 196,500 troy ounces of gold coins so far in April, the highest since December 2009 and up more three-fold from the 62,000 troy ounces the Mint had sold in all of March.

Earlier in the week, the Mint said it temporarily suspended sales of its one-tenth ounce gold bullion coins after demand spiked following a 13% drop in prices in the two days through April 15.

The Mint sold 85,000 of the one-tenth ounce coins in April, the second-strongest monthly total after January.

Buying interest also improved significantly in top consumers India and China, according to local bullion dealers.

Reports of central bank buying also supported sentiment. Russia, Turkey and Kazakhstan added to their gold reserves in March, according to International Monetary Fund data.

Some technical buying also contributed to gains after prices broke above key resistance close to the USD1,445-level, retracing half of the record plunge from April 12.

Comex gold fell to a 27-month low of USD1,322.25 an ounce on April 16.

Prices of the precious metal are now down almost 25% since hitting an all-time high of USD1,920.80 an ounce in September 2011, sparking fears that gold’s bull run is coming to an end.

Sentiment on the precious metal was dampened amid concerns the Federal Reserve will end its bond-buying program sooner-than-expected.

News that Cyprus was to sell some of its gold reserves to raise funds for its bailout also weighed on sentiment, as it sparked concerns other debt-ridden European governments would be forced to do the same.

Elsewhere on the Comex, silver for May delivery rose 1.7% to trade at USD23.22 a troy ounce, while copper for May delivery added 0.9% to trade at USD3.185 a pound.