Gold futures settled higher on Monday, with the market recouping part of the 3% loss it suffered at the end of last week.
Gold’s gains also came as Deutsche Bank said gold’s correction has probably neared an end, while a miners strike helped rally platinum and palladium prices.
Gold for August delivery GCQ3 +1.43% added $22.20, or 1.8%, to settle at $1,234.90 an ounce on the Comex division of the New York Mercantile Exchange.
Silver for September delivery SIU3 +1.61% also finished higher, adding 30 cents, or 1.6%, to $19.04 an ounce after Friday’s 4.9% loss.
Gold was seeing “a corrective, short-covering bounce from Friday’s strong losses,” said Jim Wyckoff, senior analyst at Kitco.com, in emailed comments. The metal benefited from “some safe-haven demand on Egypt unrest, too.”
Investors on Friday lopped off $39.20, or 3.1%, from gold prices on worries the U.S. Federal Reserve later this year will start tapering its program of bond purchases, which analysts have said has been a source of support for gold prices.
Those worries were reinforced after the U.S. Labor Department said the economy created 195,000 new jobs in June. Economists surveyed by MarketWatch had expected, on average, the addition of 155,000 jobs.
The Fed’s quantitative easing program has helped support the metal as QE tends to pressure the dollar and can lead to inflation. Gold is often seen as a hedge against inflation.
“Since inflation remains subdued at present, investors have ditched gold and bought off on the Goldilocks scenario that inflation will not run too hot or too cold, but be just right no matter how accommodative global central banks become,” said Elliott Orsillo, co-founder and portfolio manager at Season Investments LLC. “This philosophy seems nearsighted to us, and we still think gold should play an important part of any investor’s well diversified portfolio.”
Investors will look for more insight into the Fed’s outlook for monetary stimulus when minutes from its meeting in June are released on Wednesday.