The price of gold spiked higher in afternoon trade on Monday, finding support from a slightly weaker dollar and showing resilience against a renewed slide in crude oil.
On the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands for $1,204.70 an ounce, up $14.30 or 1.2% from Friday’s close.
Around lunchtime the gold price spiked from $1,193 to a day high of $1,209.30 after three large buy orders before slipping back.
Unusually, trade in silver was more subdued with March contracts adding 0.6% to $16.35, down from a day high of $16.44 an ounce.
Gold has been all over the place since Friday’s strong jobs data in the US gave another boost to the already rampant US dollar which jumped to a more than 8-year high against the currencies of its major trading partners.
Gold and the dollar usually move in opposite directions, and the slight retreat in the dollar index on Monday provided some support to the metal amid a fresh sell-off on oil markets.
The US crude benchmark price slipped more than 4% to $63.05 hitting fresh near 5-year lows. Gold and oil prices tend to move in tandem and gold is beginning to look expensive compared to crude.
Gold’s gains since hitting four-year lows early November top 5% while silver has advanced 5.7% over the same period.
The rally in precious metals over the last month hasn’t convinced investors in physical gold and silver-backed exchange traded funds however.
Retail buyers have been selling into the rally and the latest weekly data show the holdings of gold and silver ETFs dropping again.
Net sales were modest – only 4.6 tonnes – but did drop overall holdings back to five-year lows of 1,610.8 tonnes. Gold bullion holdings hit a record 2,632 tonnes or 93 million ounces in December 2012.
Outflows from gold funds are nowhere near as dramatic as 2013 when 800 tonnes were pulled out, but year-to-date gold ETFs have experienced outflows of 152 tonnes, an 8.6% drop.
Investors in silver continue to reduce their exposure to physical silver-backed ETFs which at the start of October reached a record 20,182 tonnes.
Last week 134.2 tonnes left silver funds reducing total holdings to 19,846 tonnes, but so far this year silver vaults have added 470 tonnes or 7.8%.