After moving sideways during the week, the gold market made a big move higher on Friday, buoyed by a rally in oil and a massive trade that wiped out earlier losses and resulted in a $47 an ounce spike higher.
In afternoon trade on the Comex division of the New York Mercantile Exchange gold for December delivery was changing hands for $1,190.70 an ounce, up $29.10 or 2.5% from Thursday's close.
At the open the metal dropped to $1,146 an ounce, not far off four-and-a-half-year lows.
Then around 10am two massive trades of some 3.5m ounces were executed lighting a fire under the price and a climb to $1,192 an ounce by lunchtime.
The price of gold enjoyed a similar surge Friday last week as it recovered from levels last seen April 2010.
Trading volumes were heavy with the most active contract trading the equivalent of 27.4 million ounces by 2:30pm EST, already double the three-month average.
The jump was attributed to short covering by large investors ahead of the weekend and a sympathy move after crude oil rallied from 4-year lows. Latest CFTC data showed
large speculators like hedge funds in gold futures increased their short positions to 121,000 contracts or 12 million ounces in the week to 11 November.
US oil prices gained more than 2% on the back of possible output cuts by Opec when it meets in Vienna in a fortnight. Gold and oil often fluctuate in tandem as crude has an influence on inflation and the metal is seen as a hedge against faster price growth.
Expectations were for a weak Friday after news that economic growth data in both Germany and France came in better than many expected. That eased the pressure on the European Central bank to embark on its own version of quantitative easing to stoke inflation and stimulate the bloc's economy.
The price of gold has been under pressure ever since the US Fed wound down its QE asset purchases and the ECB were widely seen as taking up the baton and join the Bank of Japan in printing mountains of money.
Further good news from the US also could not dent sentiment on Friday. October retail sales, a key component of the economy, came in above forecasts, snapping back from an unexpected decline the month before.
The recovery in the US, increases the chances of higher interest rates sooner and better yields ups the opportunity costs of holding gold which produces no income, only price appreciation.
Safe haven buying also returned ahead of the G20 meeting which kicks off in Australia on Saturday.
Russia's involvement in Ukraine is expected to be top of the agenda at the meeting after fresh accusation that Russia is sending heavy military equipment and personnel over the border after fresh fighting between the government and rebels in mainly Russian-speaking eastern Ukraine.
Other metals also enjoyed a late charge with December delivery silver adding 4.4% to $16.31 after falling to fresh multi-year lows earlier in the day.
Comex March Copper bounced back from a close below $3.00 a pound on Thursday to end the day at $3.0385. Platinum recovered from five-year lows early on to end 1.4% higher at $1,215.90 on the Nymex while sister metal palladium was the odd one out, ending down $4.40 at 766.45.
