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Gold Fluctuates in New York on Concern About Slower World Economic Rebound
Gold fluctuated in New York as concern that the economic recovery is faltering helped fuel investor interest in the precious metal as a protection of wealth.
The dollar was little changed against the euro after a report showed growth in Europe’s services and manufacturing industries weakened in August. Gold futures, which usually move inversely to the dollar, climbed to a seven-week high of $1,239.50 an ounce on Aug. 19 and are 3 percent below a record.
“Investors are increasingly worried about how much steam the economic recovery still has left,” said Anne-Laure Tremblay, a London-based analyst at BNP Paribas SA. “This uncertainty is supportive of gold at the moment. Though high prices act to mitigate physical demand, we are entering a seasonally stronger period when jewellers start restocking.”
Gold futures for December delivery lost 10 cents to $1,228.70 an ounce at 8 a.m. on the Comex in New York. Prices swung between a gain of 0.4 percent and a loss of 0.1 percent. Bullion for immediate delivery in London was 0.1 percent lower at $1,227.05.
Bullion rose to $1,227 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,223.50 at the afternoon fixing on Aug. 20. Futures gained 1 percent last week, a third weekly increase.
Gold futures strengthened 12 percent this year, reaching an all-time high of $1,266.50 an ounce on June 21, as investors sought to protect their wealth against financial turmoil in Europe and the prospect of currency debasement. European Central Bank council member Axel Weber said last week that the ECB should help banks through liquidity tensions before determining in the first quarter when to withdraw emergency lending measures.
‘Build a Base’
A composite index based on a survey of euro-area purchasing managers in services and manufacturing industries declined to 56.1 from 56.7 in July, London-based Markit Economics said today. Economists expected a reading of 56.3, according to the median of 14 forecasts in a Bloomberg News survey. A reading above 50 indicates expansion.
“Gold may attempt to build a base above $1,220 before continuing on its upward trend,” said Ong Yi Ling, Singapore- based investment analyst with Phillip Futures Pte Ltd. “Concerns over the economic recovery will continue to support gold prices.”
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures, or bets prices will rise, by 7.1 percent in the week ended Aug. 17, according to U.S. Commodity Futures Trading Commission data. That’s the biggest increase since April.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,299.47 metric tons on Aug. 20, the company’s website showed. Holdings are 1.6 percent below June’s record of 1,320.44 tons.
Silver for December delivery in New York fell 0.3 percent to $17.995 an ounce. Platinum for October delivery was 0.2 percent lower at $1,511.70 an ounce. Palladium for September delivery added 0.5 percent to $478.50 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kim Kyoungwha in Singapore at Kkim19@bloomberg.net.
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