Gold Firms as Dollar Falls after U.S. Data
Jul 30th, 2009 | By Contrarian Profits | Category: Financial NewsGold rose on Thursday as the dollar fell versus a basket of currencies, with rebounding stock markets and U.S. jobless figures showing a decline in continuing claims boosting appetite for assets seen as higher risk.
U.S. data showed the number of U.S. workers filing new claims for jobless benefits rose slightly more than expected last week, but a gauge of underlying labor trends fell for a fifth straight week.
Spot gold was bid at $933.50 an ounce at 1311 GMT, against $929.00 an ounce late in New York on Wednesday. U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $933.40 an ounce.
“If this is welcomed by the equities market and triggers a fresh boost, that could benefit gold,” said CMC Markets strategist Ashraf Laidi.
The dollar was down 0.39 percent at 79.3 against a basket of currencies and was lower against the euro following the data. Traders are now eyeing U.S. data on second-quarter GDP due on Friday for clues as to the next direction of the economy.
European shares rose as investors digested a raft of broadly positive corporate earnings, while U.S. stock futures extended gains after the jobs report.
Oil was also boosted by stock markets and rose above $64 a barrel. Firmer crude prices can support gold, which can be used as a hedge against oil-led inflation.
Gold demand in India, the world’s biggest bullion consumer, is recovering after recent price falls, but a further decline will be needed for buying to significantly recover.
“There are advance orders in decent quantities in the range of $900-920 an ounce,” said one dealer with a state-run bank.
Overall demand in India remains weak, however. The country’s gold imports have reached a provisional 8-10 tonnes in July so far, well below the 24 tonnes recorded last June, the Bombay Bullion Association said.
INVESTMENT SOFT
Investment demand for gold remained soft, however, as ETF holdings slipped further. Holdings of the largest bullion ETF, the SPDR Gold Trust, fell over 10 tonnes on Wednesday, and are down nearly 48 tonnes in the last four weeks.
Jason Toussaint, managing director for exchange-traded gold with the World Gold Council, said there was evidence investors were selling out of the SPDR fund to buy shares.
Analysts fear a broader liquidation of ETF gold holdings resulting from a recovery in risk appetite could jeopardise gold’s gains.
“Without strong physical demand to absorb metal coming back into the market and with funds cutting long exposure, the metal is at risk of a deeper correction,” said TheBullionDesk.com analyst James Moore.
On the supply side, the world’s largest gold producer, Barrick Gold , said it produced 1.87 million ounces of gold in the second quarter and is on track to meet its 2009 output target of 7.2-7.6 million ounces.
Among other precious metals, silver tracked gold up to $13.44 an ounce against $13.28. Spot platinum was at $1,177 an ounce against $1,170, while spot palladium was at $255 against $252.50
LONDON, July 30 (Reuters)
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