Capital Gold Group Report: Short Covering and Momentum Funds Push Gold Higher

30 April 2010, 10:54 a.m. EDT
By Daniela Cambone
Of Kitco News

Montreal (Kitco News) -- Gold hit a 2010 high above $1,175 an ounce on Friday, mostly fuelled by short covering and momentum funds said George Gero, vice president of global futures at RBC Capital Markets.

Currently trading in a range of $1,160-$1,175, the yellow metal is looking at hitting spot prices of $1,180 and $1,200 an ounce said Gero. Gold spot prices seemed to be on track to move back towards their December high, a record peak of $1,226.10 an ounce.

Driving the gold price are momentum funds that like higher volume, higher open interest and higher moving averages along with options traders, said Gero. “Funds are buying this morning as technicals are strong for the precious metals,” he said.

He added however, that gold will not hit these prices today.

Spot prices were also on the rise for platinum and palladium. “Friday’s short covering market action along with hope for a good year for the automotive industry, were seen pulling up platinum and palladium,” Gero said.

Silver, has also been playing catch-up due to the better economic news, he said. “Along with this, there was less fear of gold selling by the European Central Banks or the IMF for the moment, as prospects of a Greek rescue package strengthened,” Gero said.

The European Union and the International Monetary Fund are expected to come out with a detailed statement on the weekend. This could lead to heightened market volatility as today marks the last trading day of April.  

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