Gold Rises, Copper Falls as U.S. Home Sales Sag a Third Monthby
Investors are seeking haven assets like gold, Streible says
Zinc, lead and tin slip, aluminum and nickel little changed
Gold had the first gain in three sessions after new-home sales in the U.S. unexpectedly declined, highlighting economic-growth concerns that helped boost demand for the metal as a store of value. Copper fell.
Home purchases fell for a third straight month amid the weakest pace of demand in the U.S. West since July 2014. The figures add to the case for the Federal Reserve to tighten monetary policy at a restrained pace, boosting the appeal of precious metals, which don’t pay interest. A slowing housing market would dim demand prospects for industrial metals like copper, which relies on construction for about 40 percent of U.S. demand.
Gold has rallied 17 percent this year amid growing expectations that the Fed will be slow to raise rates this year after policy makers in March cited global risks to growth. While traders see no chance that the Fed will raise rates at its meeting this week, the odds for an increase in June were at 22 percent, compared with 75 percent at the start of the year.
“Industrial metals were hit this morning on news that home sales were weaker than expected,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “This could have a further effect on the economy, dragging down the chances for a rate hike in June, and investors are seeking some of the safe-haven assets like gold and silver.”
Gold futures for June delivery advanced 0.8 percent to settle at $1,240.20 an ounce at 1:48 p.m. on the Comex in New York.
Copper futures for July delivery slipped 0.6 percent to $2.256 a pound. On the London Metal Exchange, copper, zinc and lead slipped as tin settled unchanged. Aluminum and nickel rose.
Holdings in exchange-traded funds backed by gold slipped less than 0.1 percent to 1,756.9 metric tons on Friday, data compiled by Bloomberg show. Investors have increased holdings by 20 percent this year.
In other metal markets:
- Silver futures, which entered a bull market last week, added 0.6 percent to $17.059 an ounce on the Comex.
- Platinum advanced, while palladium declined on the New York Mercantile Exchange.