Tags: gold | market | bullion | metals

Gold Prices Hit 1-Month Highs After Soft US Data

Wednesday, 15 October 2014 10:04 AM

Gold rallied more than 1 percent to a one-month high on Wednesday after soft U.S. data knocked the dollar lower against a basket of currencies and weighed on stock markets, boosting the metal's appeal as an alternative asset.

A recovery in the dollar had prevented gold from gaining traction after it rebounded last week from its lowest since mid-2013. The dollar's slide on Wednesday helped gold push back to a peak of $1,249.30 an ounce, its highest since Sept. 11.

Spot gold was up 0.9 percent at $1,243.95 an ounce at 9:48 a.m. Eastern time, while U.S. gold futures for December delivery were up $10.40 an ounce at $1,244.70.

"It's really economic news and the dollar that predominate for gold," Sharps Pixley Chief Executive Ross Norman said. "We're seeing a fade on economic growth across the board, particularly in Europe. There are some serious concerns creeping in about disinflation."

The dollar hit session lows against the yen, euro and Swiss franc after data for September showed U.S. retail sales eased and U.S. producer prices fell for the first time in over a year, a potentially worrisome sign for the economy.

European shares also extended losses after the data, with the index hitting its lowest since early February. Wall Street stocks opened lower.

Gold has struggled for direction at a time of rising concerns over the health of the global economy, which has hurt stock markets. Economic data from Europe has remained weak and a worse-than-expected inflation reading from China has added to the gloom.

"Gold is at the mercy of other markets," Macquarie analyst Matthew Turner said. "There are two views here: that the current slowdown is temporary, or that this is another big downturn and that the central banks are powerless to stop it."

He added, "As the markets swing between those two views, you can get big moves in every market. It would be a brave person to say that gold can consolidate."

 

 

Silver Weakens

Gold took some support from physical markets.

Gold imports in India, the world's second-biggest consumer of the metal, nearly doubled in September from August to $3.75 billion, ahead of the country's wedding and festival season.

In top buyer China, physical trading activity remained firm as seen on the Shanghai Gold Exchange, with premiums holding at about $4 an ounce.

Silver was up 0.8 percent at $17.55 an ounce.

The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to its highest in five years on Wednesday at 71.7 as silver underperformed.

Bank of America Merrill Lynch cut its silver price forecast for next year by 11.5 percent on Wednesday to $18.88 an ounce.

"Silver has had structurally weaker fundamentals than gold, given a steady decline in demand from industrial buyers like the photography industry," it said in a note.

Spot platinum was up 0.2 percent at $1,262.24 an ounce, while spot palladium was down 0.5 percent at $783.47 an ounce.

Aquarius Platinum's planned sale of stakes in a small mine and project to a Chinese consortium for $37 million had been terminated after it failed to get South African regulatory approval, the mid-tier producer said on Wednesday.

© 2019 Thomson/Reuters. All rights reserved.

   
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Gold rallied more than 1 percent to a one-month high on Wednesday after soft U.S. data knocked the dollar lower against a basket of currencies and weighed on stock markets, boosting the metal's appeal as an alternative asset.
gold, market, bullion, metals
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2014-04-15
Wednesday, 15 October 2014 10:04 AM
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