Gold Rises, Extending August Rally, on U.S. Equity Skid, Economic Concerns
Gold futures rose, extending this month’s rally, as a decline in U.S. equities underpinned demand for the metal as a haven.
Stocks fell, extending three weeks of losses, after slower- than-forecast growth in personal incomes added to concern that the economic rebound is sluggish. Gold has gained 13 percent this year, reaching a record $1,266.50 an ounce in June.
“Amid all this negativity on the housing market, the economy, and thus the stock market, we find it to be an easy argument to make that gold prices will benefit due to competition with these other assets,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.
Gold futures for December delivery rose $1.30 to settle at $1,239.20 at 1:39 p.m. on the Comex in New York. The metal has climbed 4.7 percent in August.
Federal Reserve Chairman Ben S. Bernanke said on Aug. 27 that the central bank will “will do all it can” to ensure a recovery. The economy grew 1.6 percent in the second quarter, less than the government predicted last month.
The Fed has kept the main interest rate at zero percent to 0.25 percent since December 2008 to revive the economy. The central bank has also purchased mortgage-backed securities to help push down borrowing costs to support the housing market.
“Gold can benefit from a selloff in equities on fear, or it can rally on expectations of quantitative easing,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Silver futures for December delivery were unchanged at $19.074 an ounce. The metal has gained 5.9 percent this month.
Platinum futures for October delivery fell $3.90, or 0.3 percent, to $1,533.10 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery declined $4.55, or 0.9 percent, to $500.10 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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