Pares gains after better-than-expected ISM services data
By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures touched a record intraday above $1,900 an ounce on Tuesday, as steep declines in U.S. and overseas stock markets, European sovereign-debt woes and global growth concerns boosted the metal’s appeal as a safe-haven investment.
Gold for December delivery GC1Z +1.29% tapped an intraday high of $1,923.70 an ounce on the Comex division of the New York Mercantile Exchange.
It has since pared some of its gains to trade at $1,900.30, up $23.40, or 1.3% after the Institute for Supply Management on Tuesday said its service-sector index rose to 53.3% in August from 52.7% in July, defying economists’s forecasts for a decline. Read more about the ISM data.
The December gold contract had risen as high as $1,908.40 an ounce on Monday, according to data from FactSet, though all trade was electronic, as floor trade was closed for the U.S. Labor Day holiday.
“We saw gold surging through session highs, as euro-zone debt concerns continued to plague financial markets,” said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
The latest stumbling block in Europe’s ongoing sovereign-debt crisis included a suspension of talks between Greece and its regional lenders, as well as pressure on Italy to step up its austerity measures.
On Wednesday, Germany is due to receive a domestic court ruling on the legality of its euro-bailout contributions, which “could reduce the freedom of Germany to help other indebted nations,” Ong said.
“In the short term, gold prices are going to be underpinned by many supporting factors, whether it’s euro-zone debt concerns, slowing growth in the U.S. and the potential for another round of quantitative easing,” she said.
Also providing support for gold was news that the Swiss National Bank has decided to fix the country’s exchange rate at 1.20 Swiss francs per euro, according to analysts at GoldCore.
“The SNB has once again clearly indicated that the so called safe haven currency that is the Swiss franc is set to be debased alongside the dollar, the euro, the pound and all fiat currencies,” the analysts said in a note.
“Gold’s volatility is often overstated and the moves this morning are purely a function of massive volatility being seen in the international currency markets,” they said.
Other metals
The broader metals complex, however, weakened on Tuesday.
December silver SI1Z -1.02% lost 47.9 cents, or 1.1%, to $42.50 an ounce.
Copper for December delivery HG1Z -1.84% shed 7.5 cents, or 1.8%, to $4.05 per pound.
Platinum for October delivery PL1V -0.51% slipped $10.60, or 0.6%, to $1,874.20 an ounce, while December palladium PA1Z -2.67% declined $20.40, or 2.6%, to $762.80 an ounce.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Virginia Harrison is a MarketWatch reporter based in Sydney.
