Gold Surges to $1200 on Short Covering

Gold on Monday saw its biggest one-day rise since January as some dealers scrambled to cover short positions and the May options expiry triggered more buying.

U.S. gold futures for June delivery settled up 2.4 percent, its best percentage jump since January 15, at $1,203.20 an ounce. Meanwhile, spot gold rose 2.1 percent to $1,204 an ounce. On Friday spot prices slipped as low as $1,174.73 an ounce.

“It’s quite undervalued and we’ve had a long period of consolidation around the $1,200 mark,” said Mark O’Byrne, research director of bullion dealer GoldCore, noting that the breach of the $1,200 level spurred additional technical buying.