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Gold bounces off 3-month low as U.S. default fears grow

Published 10/14/2013, 08:51 AM
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Investing.com - Gold futures bounced off a three-month low on Monday, as some safe-haven buying emerged as the U.S. moved closer to a deadline to raise the national debt ceiling or risk a sovereign debt default.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,285.40 a troy ounce during U.S. morning trade, up 1.35%. 

Prices traded in range between USD1,268.50 a troy ounce, the daily low and a session high of USD1,289.70 a troy ounce.

The December contract ended down 2.21% on Friday to settle at USD1,268.20 a troy ounce. Earlier Friday, prices fell to USD1,259.60, the weakest level since July 10.

Gold futures were likely to find support at USD1,242.35 a troy ounce, the low from July 10 and resistance at USD1,311.80, the high from October 10.

Negotiations between the White House and House Republicans broke down over the weekend, after President Barack Obama rejected Republican proposals for a short-term debt ceiling increase.

If a deal to raise the government borrowing limit is not struck ahead of Thursday’s deadline, the U.S. will face an unprecedented sovereign debt default.

Gold surged to record intraday highs over USD1,900 a troy ounce after the last debt-ceiling debacle in 2011.

Elsewhere on the Comex, silver for December delivery rose 1.65% to trade at USD21.60 a troy ounce, while copper for December delivery advanced 1.15% to trade at USD3.306 a pound.

Copper futures were higher after data showed that copper imports from top consumer China surged to the highest level since March 2012 last month.

According to China's General Administration of Customs, inbound copper shipments totaled 457,847 metric tons in September, the highest since March 2012.

The figure was nearly 18% higher than copper imports in the previous month.

Total imports of copper in the third quarter rose 21.4% over the preceding quarter to 1.26 million tonnes, according to the customs data.

Copper traders now looked ahead to a raft of Chinese economic data later in the week, including reports on gross domestic product, industrial production and retail sales.

Data released earlier in the day showed that consumer price inflation in China rose 3.1% in September, above expectations for a 2.9% increase and accelerating from 2.6% in August.

The inflation report came after data over the weekend showed that China’s trade surplus narrowed sharply in September as exports declined unexpectedly.

China’s trade surplus narrowed to USD15.2 billion last month from a surplus of USD28.6 billion in August, compared to estimates for a surplus of USD27.7 billion.  

Chinese exports fell 0.3% from a year earlier, defying expectations for a 6% increase and following a 7.2% gain in August.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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