MW: Gold edges up, supported by thoughts of China purchases
NEW YORK (MarketWatch) -- Gold edged higher on Thursday as investors tracked the U.S. dollar's moves and pondered the possibility of additional purchases of the precious metal by China.
"Apart from rumors surrounding China's additional gold purchases and the U.S. dollar movements, there are no other factors driving the gold price at present," said analysts at Commerzbank in an early note.
"It is likely that China will buy further gold over the coming months and years, as, in contrast to other countries, gold still accounts for only a small proportion of China's entire foreign exchange reserves," they said.
In early trade on the New York Mercantile Exchange, gold futures for August delivery moved in a roughly $10 range, with the contract lately up $1.50, 0.2%, at $935.90.
The dollar added to its gains against most other currency rivals after the government reported a rise in weekly jobless claims. See Economic Report.
The dollar index (DXY 80.73, +0.18, +0.22%) , a measure of the greenback against half a dozen other currencies, rose to 80.757 compared with 80.716 before the data.
On Wednesday, the price of gold remained higher after the Federal Reserve left unchanged the volume of its purchases of government debt, and said the recession is lessening. August gold closed at $934.40 an ounce, a rise of $10.10, or 1%.
Kate Gibson is a reporter for MarketWatch, based in New York.
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Comments (4)
asdfgfgh 28 minutes ago -3 Votes (0 Up / 3 Dn)
There is a false assertion that Gold is a good hedge against inflation:
Contrary to logic, Gold does not necessarily do well under deflation either:
"For the next two years, deflationary pressure is going to be dominant, and it is going to become a time bomb down the line if and when we keep monetizing large deficits. It may be too soon to hedge with gold," he said.
"Unless we have high inflation, or...other risks like depression, gold looks toppy," ~
Roubini.
Genuine deflation is a sustained contraction in the total supply of money and credit, NOT a fall in the general price level
It's actually more accurate to say that gold is now an effective hedge against the loss of confidence in a currency sometimes caused by inflation or in times of panic.
