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NEW YORK (
Gold prices on Monday afternoon reversed morning losses as technical trading gained upside momentum.
Gold for June delivery at the COMEX division of the CME jumped $19.40 to settle at $1,384.10 an ounce. The
gold price traded as high as $1,397.90 and as low as $1,336.30 an ounce, while the spot price was adding $34.50, according to Kitco's gold index.
Silver prices dropped early Monday morning to the lowest level since 2010, but a steady rise off those lows past key buying levels, combined with short-sellers having to cover their short positions, boosted silver and gold.
"As the market started to come up, it was hitting [short-seller] stops and then that old huge level of support [for silver], that low [traders] would put all their buy stops there. Once [prices] hit that, that's when it did that parabolic move up," said Phil Streible, senior commodities broker at RJO Futures. "All those shorts that got in this morning, they're all covering, and all the longs that got blown out get back in on the long side."
Silver prices for July delivery gained 23 cents to $22.58 an ounce, retracing from a three-year low of $20.25 an ounce. The
U.S. dollar index was sinking 0.49% to $83.80.
Traders were saying Monday morning ahead of the sudden gap higher that the morning lows in gold and silver were a result of downward momentum that had carried over from Friday, and belief that the
Federal Reserve was signaling a retreat from inflationary policies.
"I don't know any particular news other than people continue to be concerned about exiting -- the [Fed] stimulus exit -- with the economic news improving, consumer confidence was better," said Adrian Day, president of Adrian Day Asset Management.
"We saw the market really gap open, it was a continuation of Friday's selloff," Streible
said in an interview. "We saw an accelerated downturn, just silver hitting a lot of [sell] stops, and the stops have been very thin as the lower levels go."
Gold mining stocks closed mostly higher on Monday.
Eldorado Gold(EGO) surged 10%, while
Kinross Gold(NG) popped 7.8%.
Among volume leaders,
Barrick Gold(ABX - Get Report) increased 7.3%
SPDR Gold Trust(GLD) climbed 3.1% to $135.12 a share, while
iShares Gold Trust(IAU) added 3% to $13.57.
-- Written by Joe Deaux in New York.