Gold Ends Firmer On Safe-Haven Demand, Short Covering, Weaker U.S. Dollar Index
NEW YORK (July 3) Gold prices ended the U.S. day session moderately higher Wednesday, on some safe-haven demand amid geopolitical tensions, and on more short-covering and bargain hunting. A weaker U.S. dollar index Wednesday’s was also a positive for the gold and silver markets. August gold was last up $8.90 at $1,252.10 an ounce. Spot gold was last quoted up $7.70 at $1,250.75. September Comex silver last traded up $0.421 at $19.72 an ounce.
The civil unrest in Egypt has the world market place anxious. Egypt’s president has defiantly refused the army’s call for him to step down. Some reports are saying a coup is under way, with tanks reported in the streets of Cairo. This situation is very fluid at present and the market place is watching very closely. While Egypt is not a major oil exporter, the tensions in that nation could be a proxy for developments to come in other unsettled regions of the Middle East, and beyond.
Nymex crude oil prices pushed above $102.00 a barrel and hit a 13-month high of Wednesday, partly on the Egypt news. Crude above the key $100.00 mark is a bullish underlying factor for the precious metals and other raw commodity markets.
There are new worries regarding the European Union and its financial problems, which also prompted some safe-haven buying interest in gold Wednesday. There is a political crisis in Portugal and there are concerns Greece can’t meet its debt obligations. Two of Portugal’s key government ministers have resigned in protest of the country’s austerity programs. Most European bond yields rose Wednesday, except for Germany’s, which fell, as European investors sought out the safe-haven German debt. The Euro currency saw selling pressure Wednesday due in part to these new worries. Some better Euro zone retail sales and purchasing managers’ data Wednesday only slightly assuaged the European markets.
The U.S. Independence holiday is Thursday and many U.S. markets closed early Wednesday. The important U.S. jobs report is out Friday morning. The key non-farm payrolls number of that report is forecast to come in at up around 160,000 in June, with the unemployment rate seen down to 7.5% in June from 7.6% in May. The European Central Bank and Bank of England monthly meetings are Thursday.
The U.S. dollar index was weaker Wednesday on some profit taking after hitting a five-week high overnight. The greenback bulls still have technical momentum on their side, which is a bearish underlying factor for the precious metals markets.
