Gold up $5.5 an ounce at $1261.4 in early noon trade

MUMBAI: Gold on US bourse Comex was trading up $5.5 an ounce at $1261.4 early noon IST after having fallen $31 to $1255.9 on Thursday in reaction to the US Fed's optimistic assessment of the US economy and with US jobless claims shrinking to the lowest in over a decade in the week to January 24.

ET, in its Friday edition, had reported on gold's tryst with sub-$1,260 levels over the near to mid-term.

This is good news for Indian consumers who buy to meet wedding season demand over the next few months.

The active $1,260 put option expiring in April on Comex jumped in value to $38.5 at Thursday's close from $23.7 a day earlier. The contract traded down at $35 on Friday noon. This signals the bearishness of traders towards gold in the near term. Investors who purchased the put option at Thursday’s close expect the metal to touch $1221.5 by April.

The option has risen from a low of $23.10 as recently as last Tuesday.

The $1,300 call expiring in April collapsed to $19.10 on Thursday from $30.2 a day earlier, cutting the option value for buyers and underlining the bearish trend in the near to mid-term.

On MCX, gold traded up Rs 30 per 10 gm in early noon, after having closed down 1.2% at Rs 27,419 on Thursday.