BLBG:Cash Gold Little Changed in Thin Holiday Trade; Awaits U.S. Economic Data
Gold was little changed in thin holiday trading amid speculation that the U.S. economic recovery may continue and curb demand for the precious metal as a haven investment.
Cash bullion traded at $1,604.20 an ounce at 3:23 p.m. Mumbai time. Spot silver was at $29.11 per ounce and there were no trades in platinum and palladium. Hong Kong, Singapore and Australia are closed today.
Orders for durable goods rose in November by the most in four months, the U.S. Commerce Department said on Dec. 23. A day earlier, Labor Department data showed initial jobless claims fell by 4,000 to 364,000 the previous week, versus a forecast in a Bloomberg survey for an increase to 380,000. Home prices in 20 U.S. cities probably declined at a slower pace and consumer confidence rose to a five-month high, data this week may show.
“Investors are quite anxious to see if the U.S. economy is holding up, which will boost the dollar while reducing gold’s appeal as a safe haven,” said Wang Xinyou, senior gold analyst at Agricultural Bank of China Ltd. The dollar index has climbed by about 10 percent from a low in May, Wang said.
Gold holdings in the SPDR Gold Trust (GLD), the biggest exchange- traded fund backed by bullion, decreased 4.23 metric tons to 1,254.57 tons as of Dec. 23, according to figures on the company’s website.
“Gold price has risen 13 percent this year, quite a considerable gain,” Wang said. “Gold will face some selling pressure ahead if the market reaches a consensus that the U.S. economy is gaining strength heading into 2012.”
European Worries
The precious metal touched a record $1,921.15 on Sept. 6 as investors sought to hedge against market turmoil. Prices have dropped 8 percent this month, touching $1,560.97 on Dec. 15, the lowest level since Sept. 26.
“Even though there are signs of a recovery in the U.S. economy, European economic concerns still do exist and many issues require clarity and direction,” Reena Walia Nair, senior analyst at Angel Commodities Broking Pvt., said by phone from Mumbai. “There may be a relief rally in the beginning of 2012 and some risk aversion may creep in later.”
The decline in gold prices is a temporary phase brought on by the reluctance of central banks to ease monetary policies further, Chirag Mehta, a Mumbai-based commodity fund manager at Quantum Asset Management Co., said in a report today.
“The Euro zone is currently a ticking financial time bomb,” said Mehta. “Issues such as the lack of internal policing and commitment from its member nations render the possibility of a credible fiscal union meaningless.”
Gold production in China, the world’s second-largest jewelry market, gained 5 percent in the first 10 months of this year to 290.752 tons, according to a statement from the Ministry of Industry and Information Technology. Output in October was 31.750 tons, it said.
To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
