Gold Rises for 3rd Day on Euro, Equities Gains
Reuters
Gold rose on Wednesday on gains in the euro and U.S. equities and optimism that the International Monetary Fund will raise additional funds to help combat Europe's debt crisis.
Bullion was on track for a third consecutive day of gains in decent trading volume after U.S. investment bank Goldman Sachs Group Inc's (GS.N)earnings beat estimates and increased investor appetite for risk. .N
But traders were cautious after gold lost 10 percent in December and a respected precious metals consultant warned the metal's decade-long bull run may be near an end.
"If the European situation doesn't get resolved, which has been priced into the market, we could be right back to asset-allocation type selling in a fairly short order," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.
McGhee said that gold could also sell off if China does not implement any kind of stimulus, as move that has been broadly anticipated by the markets.
Spot gold was up 0.6 percent at $1,660.50 an ounce by 12:50 p.m. EST.
The metal rose on Tuesday after weak growth suggested that China may try to boost productivity through monetary easing.
U.S. gold futures for February delivery gained $5.50 an ounce to $1,661.10.
COMEX gold options floor trader Jonathan Jossen said that the order flow was "very bullish," with good-size trades of call options at higher strike prices.
Gold fell earlier in the session. Traders cited a bearish industry report on Tuesday by metals consultancy GFMS that the metal is nearing the end of a decade-long run as the macroeconomic backdrop changes and investment in gold fades.
Silver rose 1.6 percent to $30.53 an ounce.
Silver prices fell sharply last year after hitting a record near $50 an ounce in May, and underperformed gold in the full year as they fell 10 percent against gold's 10 percent rise. Silver's ratio to gold is currently at around 55, up from 32 in April.
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Gold Hits 1-Month High, Breaks Ranks with Euro
Reuters
Gold rose to a one-month high on Wednesday, breaking ranks with the euro and equities, as evidence of strong physical demand from China fueled fund buying after bullion's recent sell-off.
The metal rose for a second day as the single currency hit a 16-month low against the dollar after ratings agency Fitch warned of dire consequences if the European Central Bank refrains from taking more action on Europe's debt crisis.
Bullion has gained around 5 percent in 2012, appearing to halt a strong, positive link with riskier assets. In the previous two months, gold had tended to fall when the dollar strengthened, trading in virtual lockstep with the euro.
However, some analysts said gold's gains could be short-lived because the metal has failed to garner safe-haven buying even as markets fretted over the viability of the euro.
"The strength of the dollar has not been friendly to commodities markets in the past couple of years. As long as the dollar is in an uptrend, I wouldn't be too positive on gold at this point," said Mark Arbeter, chief technical strategist at S&P Capital IQ.
Spot gold was up 0.3 percent at $1,637.51 an ounce by 2:36 p.m. EST (1936 GMT). U.S. February gold futures settled up $8.10 at $1,639.60 an ounce, with volume in line with its 30-day average.
Gold's gain brought prices above their 200-day moving average around $1,635 an ounce. The metal had held the 200 DMA for around three years until late December.
The metal drew support from macro hedge fund buying, said James Steel, chief commodities analyst at HSBC.
Gold's rally to a one-month high of $1,646.90 on Wednesday has given investors more confidence to buy the metal, especially in light of improved demand in India given the rupee's rise against the dollar, and a sharp increase in Chinese imports.
Data showing record gold imports to China late last year has reassured investors that physical offtake is underpinning the market. China, the number-two buyer of the metal, is preparing for the Lunar New Year this month, a key gold-buying period.
FLURRY OF TRADE
The volume of gold futures traded has risen as the metal rallied, suggesting an improved outlook for bullion, analysts said.
According to data from CME Group, which offers the benchmark gold futures contract, volume on Tuesday reached its highest in a month.
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Core Inflation Gains
CNBC
U.S. consumer prices fell slightly more than expected in June to post their biggest drop in a year on weak gasoline costs, but underlying inflation pressures remain elevated.
The Consumer Price Index fell 0.2 percent, the Labor Department said on Friday, the largest drop since June 2010, after rising 0.2 percent in May. Economists had expected prices to fall 0.1 percent.
But stripping out food and energy, core CPI rose 0.3 percent after a similar gain in May and above economists' expectations for a 0.2 percent increase.
"We are getting a very, very sharp rebound in core inflation and much more than the Fed had bargained for. We will be at price stability and possibly through it before the end of this year," said Eric Green, chief economist at TD Securities in New York.
A separate report showed a gauge of manufacturing in New York State fell again in July. The New York Federal Reserve said its "Empire State" general business conditions index was at minus 3.76 from minus 7.79 in June.
High inflation, driven by strong energy and food prices, undermined economic activity in first quarter, with growth slowing sharply to a 1.9 percent annual rate after a brisk 3.1 percent expansion in the final three months of 2010.
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Gold Recovers as Dollar Eases, Haven Buying Up
Reuters
Gold rose in Europe on Wednesday, recovering after its biggest one-day drop in nearly a month as the dollar retreated amid expectations the U.S. Federal Reserve will maintain its accommodative monetary policy for now.
Metals consultancy GFMS issued a widely anticipated industry report saying gold's decade-long price rally could take the metal above $1,600 an ounce by year-end, as investors' appetite for gold sharpens further.
The company sees gold prices averaging $1,455 an ounce this year and sticking to a range of $1,319-1,620 an ounce, executive chairman Philip Klapwijk told delegates at the launch of its Gold Survey 2011.
Spot gold was bid at $1,458.09 an ounce at 1416 GMT, against $1,453.95 late in New York on Tuesday. U.S. gold futures for June delivery rose $5.60 an ounce to $1,459.20.
Prices went below $1,445 an ounce on Tuesday as falling oil prices knocked commodities, but worries over unrest in North Africa and euro zone debt, plus expectations the Fed would lag other central banks in tightening monetary policy, lent support.
"It looks it like held the $1,444 (support level) rather well yesterday," said Afshin Nabavi, head of trading at MKS Finance. "(There was) some demand out of India on the physical front since yesterday. It feels okay here, although it is eyeing oil and silver rather closely."
The prospect that U.S. authorities could rein in their accommodative monetary policy is a potential stumbling block for gold, which as a non-yielding asset has a higher opportunity cost when interest rates rise.
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Gold Rises on Signs Drop Yesterday to One-Month Low Was Overdone
Bloomberg
Pham-Duy Nguyen
Gold rose in New York amid speculation that yesterday’s decline to a one-month low was overdone.
The metal dropped 2.3 percent yesterday following a slump in equities and commodities. Japanese stocks rose today for the first time in five days as the nation attempts to prevent a nuclear disaster following last week’s deadly earthquake and tsunami.
“Some of the panic-selling that we saw yesterday is subsiding,” said Matt Zeman, a market strategist at Kingsview Financial in Chicago. “The commodity’s bull run is not over, and people are looking to buy gold on dips.”
Gold futures for April delivery rose $3.30, or 0.2 percent, to settle at $1,396.10 an ounce at 1:39 p.m. on the Comex in New York. Yesterday, the price touched $1,380.70, the lowest since Feb. 17. Gold reached a record $1,445.70 on March 7.
Silver futures for May delivery rose 33.5 cents, or 1 percent, to $34.472 an ounce on the Comex. Yesterday, the price fell as much as 6.3 percent to $33.565. The metal has almost doubled in the past year.
Palladium futures for June delivery climbed 15 cents to $705.05 an ounce on the New York Mercantile Exchange. Platinum futures for April delivery fell $5.10, or 0.3 percent, to $1,700.50 an ounce on the Nymex.
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Gold Rises on Asian Demand, Dollar Decline
Reuters
Frank Tang
Gold rose on Tuesday as strong Asian physical demand and a weaker dollar helped the metal retrace some of this month's losses.
Customers in Asia have been buying gold at a price that remains well off its record high above $1,430 an ounce, even as other commodities such as crude oil, copper and grains are trading near multi-year highs.
"Every time gold goes down, people see it as a buying opportunity, and there is a lot of good physical buying from Asia coming into the market place," said Miguel Perez-Santalla, vice president of sales at Heraeus Precious Metals Management.
Bullion has fallen more than 3 percent in January, on track for its biggest monthly decline since July. Gold rose 30 percent in 2010, but demand for safe-haven assets has waned this month on an outlook for a more robust global economy.
Premiums for Asian gold bars rose to hit another two-year high on Monday as jewelers from China rushed to buy ahead of the Lunar New Year in early February.
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