Aug. 23 (Bloomberg) -- Gold jumped to a 11-week high, topping $1,400 an ounce in spot trading, as sales of new U.S. homes fell more than forecast, boosting speculation that the Federal Reserve will maintain economic stimulus.
Sales of newly built homes in July plunged more than 13 percent, the most in more than three years, government data showed today. The 394,000 annualized pace compared with a drop to 487,000 forecast by analysts in a Bloomberg survey. Fed policy makers said they are “broadly comfortable” in scaling back debt purchase if the economy strengthens.
“The new home-sales data tells us that all is not well with the economy, and the Fed needs to continue to support growth,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “The housing recovery is an important thing that the Fed will be looking at when it makes its decision on the timing of the tapering.”
Gold for immediate delivery rose 1.5 percent to $1,396.30 at 3:55 p.m. New York time. Earlier, the price reached $1,400.38, the highest since June 7.
On the Comex in New York, gold futures for December delivery reached $1,399.90 after settling at $1,395.80, up 1.8 percent.
This week, futures advanced 1.8 percent, the third straight gain, partly on signs that demand for jewelry, bars and coins is increasing in Asia. The World Gold Council estimates that sales will reach as much as 1,000 metric tons this year in both China and India, the world’s largest buyers.
Gold futures have dropped 17 percent this year, entering a bear market in April, as some investors lost faith in the metal amid an equity rally and low interest rates.
Gold climbed every year since 2001. The metal rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system by purchasing debt.
Platinum futures for October delivery rose 0.1 percent to $1,541.60 an ounce on the New York Mercantile Exchange. Earlier, the price reached $1,548.50, the highest since April 10.
In 2013, demand will outpace supplies for the second straight year, partly as strikes by workers in South Africa, the biggest producer, and rising costs curb output, according to Barclays Plc.
Silver futures for December delivery climbed 3 percent to $23.781 an ounce on the Comex. After the settlement, the price reached $24.145, the highest since May 9. Trading was 50 percent above the average for the past 100 days for this time, data compiled by Bloomberg showed.
This week, the metal advanced 1.8 percent, the fifth straight gain and the longest rally since September.
Palladium futures for September delivery fell 0.6 percent to $750.85 an ounce on the Nymex.
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