Gold rebounds above $1,700 as dollar, Treasury yields extend decline

Gold

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Gold extended its rally Tuesday to move past $1,700/oz and silver prices popped to their highest in more than three months, as weak U.S. manufacturing data drove down the dollar and U.S. Treasury yields.

Front-month Comex gold (XAUUSD:CUR) for October delivery closed +1.6% to $1721.10/oz, capping a 3.7% surge during the past three sessions, and October silver (XAGUSD:CUR) settled +2.5% to $21.037/oz, rising 13% over three sessions.

ETFs: (NYSEARCA:GLD), (NYSEARCA:GDX), (GDXJ), (IAU), (NUGT), (PHYS), (SIL), (SLV), (SIVR)

Analysts say market speculation that the Federal Reserve may back off a bit from its aggressive stance explains the rebound in gold and silver, but whether the upward momentum can be continued will be strongly influenced by the U.S. jobs report on Friday.

“If the jobs data comes out weaker than expected, gold will rally. If it comes out much stronger, the market might interpret that as well, the Fed can keep going here with rates,” RJO Futures strategist Bob Haberkorn told Reuters.

Gold on Monday scored its biggest daily percentage gain since February, a move Saxo Bank’s Ole Hansen attributes in part to short covering.

Gold Fields (GFI) shares closed +3.7% on Tuesday after the miner said shareholders would meet next month to vote on its proposed acquisition of Yamana Gold.