Gold futures for December delivery rose $12.70 on Friday to settle at $1,183.90 an ounce from the day’s low of $1167.98 as worse-than-expected US second quarter GDP data revived demand for safe-haven assets. The most active gold contract for December delivery moved in a wider range, hitting a low of $1,169.98 in early trade, and bounced back to the day’s high of $1,184.50 on short-covering.

Market picture data show short-covering above $1,175. The participants bought the 1,200-strike call options of the December series, paying a $7.50 premium on expectation of the price moving above $1,200. The 1,190-strike put options of the series saw strong selling, indicating support.

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“Gold is beginning to catch some traction,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The correction may have run its course and for long-term holders, this may be a buying opportunity.”

The five per cent price drop in July is the first monthly decline since March, and gold has fallen 6.5 per cent from its June 21 record of $1,266.50 an ounce.

Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined 1.5 per cent this week, heading for the biggest weekly drop since April 2009.

Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended July 27, according to US Commodity Futures Trading Commission data.

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