Gold rallied after US data showed the economy grew by a slightly better than expected 2% in the three months to September and inflation picked up.
Spot gold rose by US$4.6 to US$ 1716.3 as traders said the higher inflation would help gold through its traditional role as a hedge for rising prices.
Before the US GDP number gold had been heading lower, with traders now saying there is a trading range of US$1700 and US$1740 for the metal and with the all of the boost from the announcement of the third round of quantitative easing now being clawed back.
Sentiment over gold producers was not helped by a profit warning from African Barrick, which said it has been affected by production issues across all of its sites.
Full-year production will now be to be around 5%-10% below the bottom of its previous range of 675,000-725,000 ounces of gold, the UK-listed firm said.
Gold production fell 19% in the third quarter, blamed on equipment shortages, illegal mining and lower grades.
African Barrick’s parent, Canadian group Barrick Gold, is in talks to sell its 74% stake to China National Gold Group.
Broker Westhouse reduced its target price to 415p. On a trading point of view it is overvalued, said the broker, but a deal with China National Gold Corp could value the company between $3.5-4bn.
Elsewhere, reports from South Africa psaid there had a steady return to work by some striking miners especially among gold producers. But it is too late for Anglo American’s chief Cynthia Carroll, who announced she would stand down today.
Anglo’s platinum operations have been hit especially hard by the industrial unrest in South Africa, prompting the group recently to fire 12,000 workers who refused to return to work.
Platinum was US$4 higher at US$1,565 while silver gained US$0.18 to US$32.3.
