Gold Futures Gain on Safe-Haven Buying and US Dollar Weakening

Strategic Insights -

Gold futures rose on April 13, 2009, driven by safe-haven buying as investors sought alternative assets amidst the US dollar's weakness and market concerns over General Motors' earnings. The US Treasury's directive to GM to prepare for bankruptcy by June 1 added to the uncertainty, making gold a more attractive option for investors. The rally in platinum also lent indirect support, as speculation over new investment vehicles in the US and South Africa fueled gains in platinum and palladium futures.

Key Takeaways:

  • June gold futures gained $12.50, or 1.4%, to settle at $895.80 an ounce on the Comex division of the New York Mercantile Exchange.
  • The US Treasury directed General Motors to prepare for bankruptcy by June 1, contributing to market concerns and safe-haven buying.
  • Platinum group metals rallied strongly due to potential new investment vehicles for the metals, including a filing by ETF Securities to register for the first physically backed platinum and palladium ETFs in the US.
  • Nymex July platinum gained $51.70, or 4.3%, to settle at $1,247 an ounce, while June palladium on the exchange rose $11.25, or 4.8%, to settle at $242.35 an ounce.
  • Silver futures gained both from support as a precious metal and from a boost as an industrial metal, with Comex May silver rising 43.8 cents, or 3.5%, to settle at $12.768 an ounce.

Statistics:

  • June gold futures gained 1.4% to settle at $895.80 an ounce.
  • Platinum group metals rallied 4.3% and 4.8% for platinum and palladium futures, respectively.
  • General Motors' shares fell amid concerns over earnings and the company's dependence on the US government's bailout package.
  • 39.59 point drop in the Dow Jones Industrial Average.
  • 1.3% drop in the ICE Futures U.S. dollar index.

Sources:

  • Dow Jones Commodities News via Comtex (2009)
  • The New York Times (2009)
  • OptionSellers.com (via Michael Gross, broker and futures analyst)
  • FuturesOne (via Sterling Smith, vice president)
  • HSBC (via Jim Steel, senior vice president and metals analyst)
  • ETF Securities (filings with the Securities and Exchange Commission)