Tags: Gold | Doubts | Europe | Haven

Gold Advances as Doubts About Europe Boost Haven Demand

Monday, 09 June 2014 05:09 PM

Gold futures gained Monday for the second time in three sessions as lower investor confidence in Europe boosted demand for the precious metal as a haven.

German investor optimism for the eurozone in June fell to 8.5, trailing the 13.3 estimate of economists surveyed by Bloomberg and May’s 12.8 reading, according to Sentix in Limburg, Germany. The region’s 18-nation common currency dropped against 13 of its 16 major counterparts.

Gold gained 6.8 percent in the first quarter on concern that global economic growth was stalling. The metal slid 28 percent last year on expectations that the Federal Reserve would lower the pace of bond purchase and as equities surged. The Fed has made four straight $10 billion cuts.

“Worries about Europe are bringing in some safe-haven buying,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. Prices will “remain range-bound as the rally in the equity market will continue to overshadow everything else.”

Gold futures for August delivery added 0.1 percent to settle at $1,253.90 an ounce at 1:38 p.m. on the Comex in New York. On June 3, prices fell to a four-month low of $1,240.20.

Trading was 64 percent below the average for the past 100 days for this time, according to data compiled by Bloomberg. Bullion’s 60-day historical volatility fell to the lowest since April 2013.

Holdings in gold-backed exchange-traded products fell 2.1 metric tons to 1,715.7 tons on June 6, the lowest since October 2009, data compiled by Bloomberg show.

Silver Shorts

In a bid to spur economic growth and fight deflation, the European Central Bank on June 5 became the first major central bank to take one of its main rates negative.

Silver futures for July delivery rose 0.4 percent to $19.066 an ounce on the Comex.

Short holdings, or bets on a price drop, climbed to the highest since data begins in June 2006, the latest U.S. Commodity Futures Trading Commission data show.

On the New York Mercantile Exchange, platinum futures for July rose 0.1 percent to $1,454.30 an ounce, the fourth straight increase and the longest rally since April.

Palladium futures for September delivery slipped 0.3 percent to $841.60 an ounce. The metal reached $846.40, matching the price on June 6 that was the highest since Aug. 1, 2011.

Mineworkers have been on strike since January in South Africa, the largest platinum and second-largest palladium producer. Minister of Mineral Resources Ngoako Ramatlhodi said today would be the last government-led meeting to resolve the impasse, as producers and the dominant union are nearing an end to negotiations.

“Although palladium’s fundamentals remain very attractive, overextended positioning suggests a short-term pullback once a resolution in South Africa is reached could be quite violent,” UBS AG analysts wrote in a report today. “We would be buyers of those corrections.”

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Gold futures gained Monday for the second time in three sessions as lower investor confidence in Europe boosted demand for the precious metal as a haven.
Gold, Doubts, Europe, Haven
Monday, 09 June 2014 05:09 PM
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