BLBG:Gold Seen Cutting Weekly Drop As Europe Woes Spur Demand
Gold is set to gain for the first time in four days in London, cutting the biggest weekly loss in more than a month, as concern about Europe’s debt crisis spurs demand for a protection of wealth.
German business confidence fell to a two-year low in June, data today showed, while Spain’s 10-year borrowing costs rose above the 7 percent level this week that prompted Greece, Ireland and Portugal to seek international rescues. The Fed extended Operation Twist on June 20, an economic stimulus plan to buy longer-maturing debt, while refraining from additional purchases, and cut its forecast for 2012 U.S. growth.
“Just extending Operation Twist was not seen as enough to keep positive momentum in the gold market going,” Jim Pogoda, an investor in Summit, New Jersey, and a former precious-metals trader for Mitsubishi International Corp., said yesterday in an e-mail. “Focus will turn quickly back to debt troubles in Europe. Gold will attract some safe haven” investment, he said.
Bullion for immediate delivery rose 0.1 percent to $1,568.23 an ounce by 9:43 a.m. in London. Prices reached $1,559.80, the lowest since June 8, and are down 3.6 percent this week, the most since May 11. August-delivery futures were 0.2 percent higher at $1,568.90 on the Comex in New York.
The metal is up 0.3 percent this year after 11 consecutive annual increases. Prices dropped 2.6 percent yesterday, the most since Feb. 29, as the Standard & Poor’s GSCI gauge of 24 raw materials slid more than 20 percent from its closing high in February, entering a bear market.
Growth Threat
Data yesterday showed euro-area manufacturing shrank at the fastest pace in three years, and a Chinese output gauge indicated contraction. More Americans than forecast filed claims for jobless benefits, manufacturing in the Philadelphia region shrank and sales of existing homes fell, according to separate reports.
“Global financial market risks abound and remain a threat to U.S. economic growth,” Nick Moore, the head of commodity research at Royal Bank of Scotland Group Plc in London, wrote today in a report. “While the Fed has decided against outright balance sheet expansion for now, there are signs that the committee’s views are moving closer toward the threshold for QE3. Such a development would clearly benefit gold.”
Silver for immediate delivery fell as much as 0.9 percent to $26.635 an ounce, the lowest price since Dec. 29. It was last up 0.2 percent at $26.9325 and is down 6.1 percent this week. Palladium gained 0.2 percent to $610.10 an ounce for a 2.7 percent weekly loss. Platinum was 0.5 percent lower at $1,431.74 an ounce and is down 3.5 percent this week.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
