FRX: Gold futures jump to 3-day high after U.S. inflation data
Forex Pros – Gold futures erased early losses to trade at a three-day high on Wednesday, after official data showed that U.S. core consumer prices accelerated at the fastest pace in nearly three years in May, boosting the metal’s appeal as a hedge against inflation.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,533.25 a troy ounce during U.S. morning trade, gaining 0.5%.
It earlier rose to USD1,535.45 a troy ounce, the highest price since June 10.
Earlier in the day, the U.S. Bureau of Labor Statistics said that core inflation, which excludes volatile energy and food costs, rose by 0.3% in May, the biggest jump since July 2008, after rising by 0.2% in April.
Consumer prices including food and energy costs rose more-than-expected in May, increasing by a seasonally adjusted 0.2%, after rising by 0.4% in April.
Separate reports showed that manufacturing activity in New York State unexpectedly contracted in June, while U.S. industrial production rose less-than-expected in May.
Prices were also buoyed amid ongoing uncertainty over a resolution to Greece’s debt woes. In Athens, protesters gathered outside Parliament, clashing with riot police, as lawmakers were set to vote on austerity measures later in the day.
Investors often buy gold as a refuge against economic uncertainty and as a hedge against inflation.
Meanwhile, BNP Paribas raised its 2011 average gold price forecast to USD1,510 an ounce and affirmed its 2012 forecast at USD1,600 an ounce.
Gold’s earlier losses came as a stronger U.S. dollar pressured prices. The dollar index posted sharp gains against the euro, while the dollar index was up 0.93% to trade at 75.50, after earlier rising to 75.61, the highest since May 27.
Elsewhere, silver for July delivery rose 0.35% to trade at USD35.56 a troy ounce during U.S. morning trade, while copper for July delivery shed 0.23% to trade at USD4.148 a pound.
BNP lowered its outlook on silver prices to USD37.70 an ounce in 2011, from a previous estimate of USD41.40. In 2012, it expects silver prices to average USD38.10, up from a prior forecast of USD37.80.
