Gold hits one-month high on weak US outlook
Gold rose to its highest price in more than a month on Monday, as fears of a slowing US economy and expectations that Federal Reserve monetary policy would remain easy prompted safe-haven demand.
June 07, 2011 / 11:58 IST
Gold rose to its highest price in more than a month on Monday, as fears of a slowing US economy and expectations that Federal Reserve monetary policy would remain easy prompted safe-haven demand.
Bullion has gained nearly 6% in the past three weeks, boosted by a string of disappointing US economic indicators including Friday's weak jobs data. "A lot of people are taking their risk off by getting out of the S&P 500 and other riskier assets. There is too much uncertainty with the US currency and the euro," said Phillip Streible, senior market strategist with Lind Waldock, a unit of futures broker MF Global."So, people think the safest place is the gold market at the moment."A survey by the Federal Reserve Bank of Chicago showed that US economic growth is expected to slow this year as inflation rises, a pattern that will reverse next year. Investors now await a speech by Federal Reserve Chairman Ben Bernanke on the US economic outlook on Tuesday. Spot gold was up 0.1% at USD 1,542.79 an ounce by 2:39 pm EDT (1839 GMT). Gold initially hit a session high of USD 1,553.30, its loftiest since early May, but pared gains as the dollar strengthened against the euro.Bullion hit a record USD 1,575.79 an ounce on May 2.US August gold futures settled up USD 4.80 at USD 1,547.20, having traded from USD 1,542 to USD 1,553.90. COMEX gold futures volume was below 100,000 lots, almost 60% under its 30-day average, extending last week's weaker turnover.Gold's weekly charts showed prices were well supported within a long-term upward trend channel above its 50-day moving average, said Adam Sarhan of Sarhan Capital.Spot silver rose 1.3% to USD 36.68, rebounding from near two-week lows in the previous session. That brought the gold/silver ratio to 42.1, its lowest since Thursday, denoting its outperformance over gold in the last few days. Silver prices have fallen more than a quarter since hitting a record USD 49.51 on April 28 but are up 19% on the year, compared with gold's 9%rise.Friday's surprisingly weak US employment data kept the dollar near one-month lows and suppressed investor risk appetite."Weak US economic data last week are strengthening expectations that the Federal Reserve will maintain key interest rates at the current very low level for even longer, which will keep the opportunity costs for precious metals low," Commerzbank said in a note.The S&P 500 index fell to its lowest in more than two months as US stocks extended a five-week decline on a weak performance by the bank and financial sector. Peru, Yemen, Euro Debt In FocusAnalysts cited Peru's presidential election victory by left-wing former army commander Ollanta Humala for fundamental support. Investors are worried Humala's views could lead to lower gold output by the world's sixth-largest producer. Uncertainty over the future of Yemen while President Ali Abdullah Saleh was recovering from injuries sustained in an attack on his palace also unnerved markets. Greece's campaign to secure another bailout to avoid default added to investor jitters.Strong interest by US managed money more than off set traditionally weaker gold jewelry demand in the summer ahead of India's wedding season, a major gold buying event.Speculative holdings of gold futures notched their largest increase in 13 months last week, according to data from the US Commodity Futures Trading Commission.The net noncommercial position in gold, often used as a proxy for speculative activity, staged its largest weekly rise since April 2010.Platinum was up 84 cents at USD 1,811.99 an ounce, while palladium was up 1.1% at USD 788.47, having risen as much as 1.7% to an intraday peak at USD 793.50, its highest since early May.Prices at 2:39 pm EDT (1839 GMT)LAST/ NET PCT YTDCLOSE CHG CHG CHGUS gold 1547.20 4.80 0.3% 8.9%US silver 36.782 0.591 0.0% 18.9%US platinum 1821.20 -2.50 -0.1% 2.4%US palladium 797.05 13.80 1.8% -0.8%Gold 1542.79 0.99 0.1% 8.7%Silver 36.68 0.47 1.3% 18.9%Platinum 1811.99 0.84 0.0% 2.5%Palladium 788.47 8.27 1.1% -1.4%Gold Fix 1549.00 6.25 0.4% 9.8%Silver Fix 36.87 168.00 4.8% 20.4%Platinum Fix 1819.00 1.00 0.1% 5.1%Palladium Fix 789.00 2.00 0.3% -0.3% Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
