Copper also bid higher after upbeat China comments
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold prices briefly pushed past the $1,400 an ounce on Monday, but pulled back as investors looked ahead to durable-goods data to shed some light on further Federal Reserve direction. Meanwhile, data last week showed a record daily inflow for gold exchange-traded products.
Gold for December delivery GCZ3 -0.06% inched $1.20 higher, or 0.1%, to $1,397.00 an ounce in electronic trading, with prices for the most-active contract remaining at their highest level since early June, according to FactSet data.Gold leapt to a session high just ahead of the European open of $1,407 an ounce before pulling back.
Investors are awaiting a report on U.S. durable-goods orders for July. Economists polled by MarketWatch expect a decline of 4.9%.
Meanwhile, there are signs that investors are moving back into gold. Analysts at Barclays said exchange-traded products recorded their biggest daily inflow since Jan. 1 on Friday at 5.8 tonnes, with holdings of SPDR Gold Trust GLD -0.13% rising by 6.6 tonnes.
“Flows for the month-to-date remain negative at 17 tonnes but the pace of outflows has showed signs of slowing as equity markets have weakened and prices have risen, meaning fewer ETPs are loss-making,” said analysts at Barclays, in a note on Monday.
“Given that we continue to expect tapering to be announced in September and that we expect the dollar to strengthen, ETP holdings are likely to remain fragile but flows will remain a key area to track.”
Data from the Commodity Futures Trading Commission for the week to Aug. 20 showed money managers increased bets that gold prices would extend gains. Analysts at Barclays said this was in part due to short coverings, but fresh long positions were also being established.
“Gross short positions are now at their lowest since April, suggesting the scope for further aggressive short covering may slow,” said Barclays analysts, who added that after weaker-than-expected U.S. new-home sales, it will be key to track if gold sentiment is changing and those fresh longs continue to build.
“This is the first increase in gross longs in four weeks and there have not been consecutive weeks of an increase since April,” said the analysts.
The metal on Friday surged $25, or 1.8%, on the Comex division of the New York Mercantile Exchange as “surprisingly weak new-home sales figures in the U.S. during July may be a concern for the Fed, and this is supporting the gold price,” CMC Markets chief market analyst Ric Spooner said in a note Monday.
Friday’s rally resulted in a 1.9% gain for gold for last week as a whole.
Sales of new U.S. homes dropped 13.4% to a seasonally adjusted annual rate of 394,000 in July, according to government data. Economists polled by MarketWatch had expected sales to pull back in July to a rate of 485,000.
Gold prices are seen as a beneficiary of monetary stimulus by the Federal Reserve, and the soft home-sales data raised some anticipation that the Fed would delay the reduction of its stimulus. The Fed currently buys $85 billion a month in assets.
Federal Reserve officials wrapped up their annual retreat this weekend in Jackson Hole, Wyo., and experts attending the conference said it appears the Fed is still aiming to taper asset purchases at its September meeting.
Many attendees, however, told MarketWatch they would prefer to see a delay in tapering until later this year.
Gold remains lower on a year-to-date basis, though the loss has been pared to 17%, in part due to short-covering.
Elsewhere in the metals complex, September silver SIU3 +1.27% tacked on 30 cents, or 1.4%, to $24.05 an ounce, adding to last week’s rise of 1.8%.
September copper HGU3 +0.60% rose 2 cents, or 0.5%, to $3.37 a pound. Copper last week shed 0.4%. Analysts at Commerzbank said speculative investors also increased their interest in copper, with money managers more than doubling net long positions to 14.3 thousand contracts, the highest level since mid-February.
“Three weeks earlier, they held almost record-high net short positions, meaning that most speculators bet on falling prices. Thus the metal markets are to some extent already anticipating better demand prospects,” said the analysts in a note.
There were also upbeat comments about China that inspired copper, said the Commerzbank analysts. Reuters reported that a spokesperson from the National Bureau of Statistics in China said the country will meet its growth target of 7.5% for the year, helped by better-than-expected results from Chinese firms.
September palladium PAU3 +0.05% picked up $1.55, or 0.2%, to $752.40 an ounce, slightly cutting into its 1.6% decline last week.
But October platinum PLV3 -0.23% fell $4.40, or 0.3%, to $1,537.20 an ounce. It finished last week higher by 0.9%.
