SAN FRANCISCO— Gold futures on Thursday scored their highest settlement in more than two weeks as a weaker dollar, disappointing U.S. economic data and strong physical demand in Asia combined to lift prices above $1,400 an ounce.
A rise in gold holdings in the SPDR Gold Trust (NAR:GLD) , the largest U.S. gold-backed exchange-traded fund, was also a key supportive factor for the metal, analysts said.
Gold for August delivery (CNS:GCQ3) rose $20.20, or 1.5%, to settle at $1,412 an ounce on the Comex division of the New York Mercantile Exchange. That was the highest close for a most-active contract since May 14, according to FactSet data. On Wednesday, prices settled higher by $12.10, or 0.9%.
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Weakness in the U.S. dollar (NYE:DXY) , which lost significant ground against the euro (ICAP:EURUSD) , aided gold’s climb on Wednesday.
A fall in the greenback tends to provide support for dollar-denominated commodities such as gold, as it makes them less expensive for holders of other currencies to buy them.
“The greenback fell sharply after the first quarter GDP, [weekly] unemployment claims and pending home sales all disappointed expectations,” said Fawad Razaqzada, technical analyst at GFT Markets, in a daily note. “This helped to boost the appeal of gold and silver, which continue to attract solid demand in the physical market.”
July silver (CNS:SIN3) rose 24 cents, or 1.1%, to end at $22.69 an ounce.
The U.S. economy expanded at an annual rate of 2.4% in the first quarter, down from an initial estimate of 2.5%, data from the Commerce Department.
Separately, the Labor Department reported that the number of U.S. workers who filed new applications for unemployment benefits rose by a more-than-expected 10,000 last week to 354,000.
And the National Association of Realtors said that pending sales of homes ticked up 0.3% in April with gain in the Northeast and Midwest, but the South and the West saw decreases.
Asia buys
The gold market has seen support from physical buying in Asia, analysts have said. Asian gold demand from this April to June is expected to reach a quarterly record, the World Gold Council said Wednesday, according to Reuters.
“Store-of-wealth buyers [in Asia] see gold there as a bargain and are scooping it up with both hands,” said Mark O’Byrne, research director at GoldCore in Dublin.
Reuters
In Singapore and Hong Kong, local premiums for 1-kilogram gold bars have shot to record levels this spring, and the world’s heaviest gold-buying nation, India, is on track for record quarterly imports, according to the WGC, wrote Adrian Ash, head of research at BullionVault in a daily update.
Outflows from gold exchange-traded funds and cuts in forecasts for gold prices have recently weighed on the precious metal, which is on pace to fall of roughly 4% in May. Earlier this month, it had been on track for a decline of more than 7%.
But gold holdings in the SPDR Gold Trust rose to 1,013.15 metric tons on Wednesday, up from 1,012.25 metric tons a day earlier. Data show that holdings haven’t climbed since May 9.
As had been said before, “once the sales from the SPDR Gold ETF ceased, the weight of Asian demand would turn the gold price around,” said Julian Phillips, founder of and contributor to GoldForecaster.com.
“If there are no more sales to come, then the record short position on Comex will prove a driving force to send the gold price higher as these shorts are closed and as the major banks and hedge funds go into the market to buy their gold back,” he said.
Earlier, gold gained after another volatile day for Japanese equities. The Nikkei Stock Average (TYO:JP:NIK) , which had been dropping throughout most of Thursday’s session, closed down 5.2%.
The drop in the Nikkei is “creating concerns that we may see ‘risk on’ return with a vengeance to other markets — and this may be leading to diversification into gold,” said O’Byrne.
Elsewhere in the metals complex Thursday, July copper (CNS:HGN3) rose 2 cents, or 0.6%, to $3.32 a pound.
September palladium (NMN:PAU3) tacked on $10.45, or 1.4%, to close at $760.55 an ounce and July platinum (NMN:PLN3) rose $29.70, or 2%, to $1,482.70 an ounce. Both metals fell in the previous session. (MarketWatch)
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