Gold Futures Rebound

August-dated contracts rise $6.20 at $656.50 an ounce.
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Metals prices were bouncing back Monday from a major swoon that ended last week.

August-dated gold contracts were rising $6.20 at $656.50 an ounce, while July silver moved up 11 cents at $13.15 an ounce in recent New York futures market action.

On Friday, gold prices dropped almost $15, and silver slid 44 cents.

The bullion exchanged-traded funds that hold inventories of the metals, the

iShares Comex Gold Trust

(IAU) - Get Report

and

iShares Silver Trust

(SLV) - Get Report

, were little changed.

Montreal-based bullion dealer Kitco notes that traders were still somewhat nervous following the recent declines.

Sen. Joe Lieberman (I., Conn.) said Sunday that the U.S. should consider taking direct military action against Iran in an effort to solve the continuing civil strife in neighboring Iraq. If such views end up gathering steam, safe haven demand for precious metals may get a boost, as gold and silver tend to be a universally accepted medium of exchange relative to paper currencies during times of war.

New data released late last week shows that bullion holdings of the

streetTracks Gold Shares

(GLD) - Get Report

, the biggest of the gold ETFs, fell almost 8 tons Friday to about 470 tons as investors bailed amid the price drop.

As for base metals, prices for copper were ahead also, up 7 cents at $3.32 a pound, boosting shares of producer

Freeport-McMoRan Copper & Gold

(FCX) - Get Report

1%.

Elsewhere,

U.S. Steel

(X) - Get Report

was dropping 5.6% after Germany's

ThyssenKrupp

denied it was in merger talks with the firm. Widespread reports said the German company wouldn't buy Russia's

Severstal

either.

Meanwhile, on the agricultural side, grain prices were jumping. Benchmark corn contracts were ahead 2.8% at $3.93 a bushel, and wheat was up 1.7% at $5.36 a bushel. Soybeans edged higher by 1%.