Gold futures regained a key psychological level as relative calm in other markets and a weaker dollar drew buyers back to the precious metal. The contract for November delivery rose $23.90, or 1.4 percent, to settle at $1,702.20 a troy ounce on the Comex division of the New York Mercantile Exchange. Futures Monday settled below $1,700 for the first time since late October, as investors moved to cash amid worries about a potential credit crunch in the euro zone. But US equities were near steady for much of gold's trading day Tuesday, and the euro-zone worries that had weighed on growth-sensitive assets was mostly absent. Silver for November delivery rose 5.9 percent to settle at $32.9480 a troy ounce. The International Monetary Fund Tuesday said it had approved new lending tools to help countries cope with economic crisis, including a provision that would allow countries to borrow as much as 10 times their contributions to the IMF. The dollar fell against the euro, easing some pressure on dollar-denominated gold futures by making them cheaper for buyers using other currencies. Some investors buy gold on the belief that it holds its value well during economic turmoil, but that relationship hasn't held true in recent months when fears of a European credit crunch dominated trading. Instead, gold has moved more in line with growth-sensitive assets as investors used the precious metal as a source of cash to cover other losses or hold in case of further deterioration in the euro zone. “You've got to anticipate broader volatility and we certainly see it in gold,” said Adrian Ash, director of research with online metals dealer BullionVault. “This is where it gets difficult for gold investors, because it's not acting as prescribed.” Investment demand in gold has picked up despite the recent price declines in the futures market. Inflows of physical gold into exchange-traded funds tracked by Barclays Capital are on track for their highest monthly gain since July. Price volatility Tuesday was boosted by the pending expiration of options positions on December-delivery contracts, market participants said. “It's just the usual options-expiration scramble,” said Frank Lesh, a broker with FuturePath Trading.
