Gold Jumps with Increased Hopes for QE3

CHICAGO, May 17 (Xinhua) -- Gold futures on the COMEX division of the New York Mercantile Exchange rallied to end a four- session losing streak Thursday, as disappointing U.S. manufacturing data stirred traders' hopes for more quantitative easing action from the U.S. Fed.

The most active gold contract for June delivery soared 38.3 dollars, or 2.49 percent, to settle at 1,574.9 dollars per ounce.

After closing at a ten-month low in the previous session, gold managed a massive turnaround to end up almost 40 dollars higher for the day.

Gold saw the most momentum following data from the Philadelphia Federal Reserve Bank, which reported that its manufacturing index plummeted to -5.8 in May, down from 8.5 in April. As analysts had expected the index to increase to around 10, the stark reversal into a negative reading, the first negative reading since September, greatly concerned traders.

As recent U.S. macroeconomic data has turned more lukewarm, more investors seem to voice doubts about the American economic recovery. In the face of such conditions, gold bulls hope for more intervention from the Federal Reserve Bank and the return of quantitative easing policies.

Quantitative easing policies support gold, as traders see loose monetary policy as spurring inflation.

Wednesday's ten-month low pricing also could have benefited gold, as bargain hunters were enticed back into the metals complex.

Outside market forces Thursday were mixed, as the U.S. equities and crude oil markets continued their downward slides, but the dollar also saw its first break in 14 days.

Silver for July delivery sharply rose 82.4 cents, or 3.03 percent,to settle at 28.02 dollars per ounce.