Gold extends winning streak with rise of more than 1%
SINGAPORE (Aug 12) Gold climbed more than 1% on Monday to its highest in nearly two weeks, on soft US data and as holdings in the world’s biggest gold exchange-traded fund (ETF) rose for the first time in two months.
Holdings in SPDR Gold Trust grew 0.2% to 911.13 tonnes on Friday — the first increase since June 10. The fund has seen more than 14-million ounces in outflows this year, about $19bn at current prices.
Outflows from ETFs have had a big impact on gold, which has lost about 20% of its value in 2013.
Investors have been exiting gold in favour of higher-yielding stocks as the metal’s safe-haven appeal has been dented by a recovering US economy. Talk of a pullback in US stimulus measures has also hurt bullion.
"The inflows into SPDR are good news," a trader said in Hong Kong. "The fund tends to have an impact on prices because of its size. But I don’t think (inflows) will persist as fundamentals for gold are still negative."
Spot gold had gained 1.2% to $1,329.74 an ounce by 4.08am GMT. It hit $1,333.31 earlier — its highest this month.
Silver rose 2.2%, while platinum touched fresh two-month highs.
Gold’s sharp jump was in part due to some technical buying after prices broke through resistance around $1,320, traders said.
Spot gold was expected to test further resistance at $1,336, with a good chance of breaking through that and rising towards $1,356, Reuters technicals analyst Wang Tao said.
Gold has also been boosted by data showing US wholesale inventories fell unexpectedly for a second straight month in June, prompting economists to trim their second-quarter economic growth estimates.
Investors are watching economic data to gauge when the US Federal Reserve will begin reducing its commodity-friendly stimulus measures. Weak data could prompt the central bank to hold back on the cuts.
Chinese demand
China’s gold consumption jumped to 706.36 tonnes in the first half of the year, compared with 832.18 tonnes in the whole of 2012, the China Gold Association said on Monday.
Gold’s decline after 12 annual gains has released pent-up demand across the world for jewellery, bars and coins.
China is expected to overtake India as the world’s biggest gold consumer in 2013, with India taking steps to limit imports and reduce its trade deficit.
