Gold futures jump 1pc during last session of first quarter by:...

Gold futures jump 1pc during last session of first quarter
by: Matt Day From: Dow Jones Newswires March 31, 2012

Gold's allure jumped further as the US greenback slumped. Source: AFP

GOLD futures rose yesterday, extending the metal's gain during the quarter to more than 6 per cent as traders bet Europe's expanded bailout fund would limit the risk of a credit crunch there.

The most actively traded gold contract, for June delivery, rose $US17, or 1 per cent, to settle at $US1671.90 a troy ounce on the Comex division of the New York Mercantile Exchange, snapping three consecutive days of losses.

During the first quarter of 2012, for which trading ended yesterday, futures gained 6.3 per cent, largely on the view central banks in Europe and the US would continue to deploy accommodative monetary policies to prop up economic growth. Such loose monetary policy can support gold prices by drawing investors seeking a hedge against weakness in paper currencies.

Gold's gain came after eurozone finance ministers agreed to boost the region's crisis-fighting tools, increasing its emergency lending capacity to €700 billion ($902bn).

The news supported the view European leaders were prepared to keep pumping money into the financial system in an effort to forestall a debt-fuelled credit crunch.

The US dollar slumped, adding support to gold. A weaker US unit can make greenback-denominated gold futures appear cheaper for potential buyers using other currencies.

The ICE US Dollar Index, which tracks the US currency against currencies of some major US trading partners, yesterday touched its lowest level since March 1.

Gold's gains also came as money managers adjusted their positions during the last trading day of the month and quarter.

"Money is coming into gold and (the) metals complex in anticipation of the next quarter asset allocations," said George Gero, a vice-president and precious metals strategist with RBC Capital Markets.

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