Gold Rises as ECB Comments Lift Euro
Yahoo News
Gold climbed towards $1,660 an ounce on Thursday after European Central Bank president Mario Draghi said the supply of cheap money released by the bank was helping stabilise the banking system and lift the euro zone economy, boosting the euro.
Spot gold was up 1 percent at $1,658.19 an ounce at 1444 GMT, having earlier touched a one-month high at $1,659.66. U.S. gold futures for February delivery were up $19.70 an ounce at $1,659.20.
Draghi said after the bank opted to hold interest rates steady that the ECB's flood of three-year money is helping the euro zone banking system substantially and supporting confidence in economic growth.
The bank's bond-buying process has only just begun to achieve its aim, he said. The euro rose to session highs after his comments, boosting gold, which tends to rise as the dollar weakens.
"There has been a fairly pronounced pullback (in the dollar) following weaker U.S. macro numbers and Draghi's comments," said VTB Capital analyst Andrey Kryuchenkov. He said a breach of $1,660 on gold could see prices swiftly return to $1,680.
Although it is currently rising, concerns that the euro zone economy remains mired in its debt crisis while the U.S. economy is improving has pressured the euro this year and consequently lifted euro-priced gold.
The euro is down 1.2 percent versus the dollar in January. Gold in euro terms has outperformed the spot metal this year, rising 7.4 percent against dollar gold's 6.0 percent.
The euro earlier rose against the dollar after an encouraging Spanish bond auction, which saw nearly 10 billion euros' worth of bonds sold against a target of 4-5 billion.
INDIA GEARS UP FOR WEDDING SEASON
Demand for physical metal in number one gold consumer India rose ahead of its wedding season as the rupee strengthened, dealers in Mumbai said.
"Demand has been good since last week, as prices are down due to a stronger rupee," said Harshad Ajmera, proprietor of JJ Gold House in Kolkata. "Jewellers are comfortable at this rate."
Chinese demand ahead of the Lunar New Year there this month has largely run its course, dealers said. Meanwhile, Chinese supply rose 2.7 percent in November to 32.6 tonnes, the Ministry of Industry and Information Technology said on Thursday.
China is the world's biggest producer of mined gold.
Among other precious metals, silver was up 1.7 percent at $30.45 an ounce.
Demand for silver coins has been strong at the start of the year, with the U.S. Mint reporting American Eagle silver coin sales of 4.257 million ounces in January so far, already a higher volume than recorded in any of the previous three months.
U.S. Mint gold coin sales have also been healthy at 82,500 ounces so far this month, already 26 percent higher than in the entire month of December.
Spot platinum was up 0.4 percent at $1,494.99 an ounce, while spot palladium was flat at $640.22 an ounce.
Platinum climbed for a fourth day on Thursday, on track for its largest weekly gain since October with a rise of 7 percent. Platinum's outperformance of gold pulled the gold/platinum ratio -- the number of platinum ounces needed to buy an ounce of gold -- down to 1.10 from a high of 1.15 earlier this week.
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