PRECIOUS: Gold Rises Alongside Equities as Risk Appetite Increases, Reports Reuters

Gold Ends Four-Day Losing Streak Amid Rising Risk Appetite

Gold prices rose on Wednesday, breaking a four-day decline as increased risk appetite among investors led to a wave of buying across various assets in anticipation of Friday’s U.S. jobs report.

The precious metal found support from a weaker dollar against the euro after a prominent European Central Bank official indicated that interest rate hikes would proceed gradually. Meanwhile, global stock markets enjoyed a boost of over 1% as strong hiring reports from U.S. private employers uplifted both U.S. and European equities.

"It appears that risk is returning to the market, which is benefiting precious metals and stock markets, driving up prices,” noted Zachary Oxman, managing director at TrendMax Futures. He also highlighted that buying activity was enhanced by the approach of April and the start of the second quarter.

Traditionally, gold serves as a safe haven during periods of economic and political uncertainty. Its value has dramatically increased over the years, nearly sextupling from roughly $250 an ounce in 2001.

As of 3:33 p.m. EDT, spot gold climbed 0.4% to $1,422 an ounce, having previously reached a peak of $1,430. U.S. gold futures for April delivery saw a rise, closing up $7.60 at $1,423.80.

Earlier in the day, both gold and oil experienced significant drops due to reports of rising crude inventories. However, both commodities managed to recover from their earlier lows.

Gold futures traded on the New York Mercantile Exchange were among the most active, with trading volumes exceeding 200,000 lots, marking one of the busiest days of the year.

Despite recent strong trading volumes, analysts suggested that a reluctance among investors regarding gold’s appeal was evident. Fred Schoenstein, a trader at Heraeus Precious Metals Management, stated, "The high volume indicates that some investors are reallocating from gold to other assets." He further explained that while gold has performed well recently, investors may seek opportunities in other markets.

A Reuters poll indicated that the decade-long rise in gold prices, which hit a peak of $1,447.40 an ounce last week, may be reaching a plateau in the upcoming quarter, with potential downside risks for bullion.

Analyst Rick Bensginor of Dahlman Rose mentioned that for gold to achieve further significant gains, it must consistently close above its resistance level of $1,445 an ounce.

Gold/Silver Ratio Hits 28-Year Low

Silver also saw gains, rising 0.7% to $37.33 an ounce, causing the gold/silver ratio to fall below 38, marking the lowest level since 1983.

Daniel Major, an analyst at RBS, attributed the increase in silver prices to trading driven more by technical factors rather than fundamental demand. According to a report by metals consultancy GFMS prepared for the Silver Institute, industrial demand for silver is expected to increase, reaching 665.9 million ounces by 2015, up from 487.4 million ounces last year.

As financial markets assess signals from euro zone and U.S. authorities regarding potential tightening of historically low monetary policies, gold has struggled to make new gains.

"Market participants are closely monitoring U.S. policy signals and the European Central Bank’s decisions in its upcoming meeting," said Credit Agricole analyst Robin Bhar. Investors are also awaiting the forthcoming U.S. nonfarm payrolls report, which might influence the short-term direction for gold.

In addition, platinum group metals experienced a rebound after a period of decline due to disruptions at major Japanese auto plants following the recent earthquake and tsunami. PGM sentiment improved as Nissan announced the resumption of regular operations at most of its Japanese plants by mid-April.

Platinum rose 2% to $1,768.50 an ounce, while palladium increased by 0.3% to $750.72, as reported at 3:33 p.m. EDT.