Gold Fluctuates Near Eight-Week High Amid Concern About Stalling Economies
Gold fluctuated near an eight-week high in New York and headed for a fourth weekly gain on concern that economic growth is stalling.
Futures are trading 2.2 percent below a record. Prices yesterday reached $1,246 an ounce, the highest level since June 30. The U.S. economy probably expanded less than initially estimated in the second quarter, economists expect a report to show today. The dollar was little changed against the euro, as were European equities.
“Investment demand should profit from continued uncertainty about economic growth,” Commerzbank AG analysts including Eugen Weinberg said today in a report. “The decline from yesterday’s peak can be explained by profit-taking by short-term-oriented market players,” though consumption will increase during the approaching festival season in India, the world’s largest gold buyer, they said.
Gold futures for December delivery added 90 cents, or 0.1 percent, to $1,238.60 an ounce at 8:09 a.m. on the Comex in New York. Prices are up 0.8 percent this week and today swung between a loss of 0.2 percent and a gain of 0.3 percent. Bullion for immediate delivery in London was 0.1 percent lower at $1,236.85.
The metal fell to $1,234.50 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,237 at yesterday’s afternoon fixing. Thirteen of 18 traders, investors and analysts surveyed by Bloomberg, or 72 percent, said the metal will gain next week. Five forecast lower prices.
Comex Backwardation
August gold is $3.20 an ounce more expensive than the September contract on the Comex, a so-called backwardation. It “suggests that there is increasing tightness in the physical gold market,” analysts at Dublin-based broker GoldCore Ltd. said in a report. The December contract is the most active.
Futures strengthened 13 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 slowing economic growth.
While figures yesterday showed weekly U.S. initial jobless claims fell more than expected, other indicators point to slower growth in the country. Orders for durable goods rose less than forecast in July and sales of existing and new homes were weaker than estimated, reports showed this week.
The government may today report the economy expanded at a 1.4 percent pace in the second quarter, the smallest gain in the year-old recovery and less than the 2.4 percent rate earlier estimated, according to economists surveyed by Bloomberg.
‘Only One Direction’
“The U.S. is yet to take its economic medicine and address the underlying problems with its economy,” said Gavin Wendt, Sydney-based senior analyst with MineLife Pty. “The same can be said of much of Europe. There is only one direction for the price of gold, and that is up.”
Federal Reserve Chairman Ben S. Bernanke will speak starting at 10 a.m. New York time to central bankers from around the world at a symposium in Jackson Hole, Wyoming. His remarks will be followed by a speech from European Central Bank President Jean-Claude Trichet.
Gold, headed for a 10th annual gain, may reach at least $1,300 an ounce this year as investors seek a shield against financial turmoil, weak currencies and inflation, GFMS Ltd. Chief Executive Officer Paul Walker said in an interview, repeating a June forecast by the researcher.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged for a second day at 1,297.95 metric tons yesterday, figures on the company’s website showed. Holdings touched a record of 1,320.44 tons in June.
Silver for December delivery in New York lost 0.1 percent to $19.01 an ounce. Platinum for October delivery was 0.6 percent lower at $1,530.70 an ounce. Palladium for December delivery fell 1 percent to $499.45 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
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