Gold Set for Second Weekly Loss as Economic Outlook Curbs Demand
London (July 25) Gold held near a five-week low, heading for a second weekly loss, as the outlook for improving U.S. economic growth curbed demand for a protection of wealth.
Bullion fell as much as 1.3 percent to $1,287.80 an ounce yesterday, the lowest since June 19, as U.S. equities reached a record after data showed jobless claims fell and global manufacturing increased. The metal slid 28 percent last year on expectations the Federal Reserve would tighten monetary policy.
U.S. interest rates may rise sooner than forecast “if the labor market continues to improve more quickly than anticipated,” Fed Chair Janet Yellen said last week, adding the central bank must press on with stimulus because “significant slack” remains. Gold is heading for a monthly loss even amid unrest in Ukraine and the Middle East.
“Positive economic data put a dampener on the gold market, as risk assets caught a bid and safe-haven buying dried up,” Australia & New Zealand Banking Group Ltd. analysts including Victor Thianpiriya wrote in a note today. Gold’s drop yesterday took it below the “psychological barrier of $1,300 an ounce,” they said.
Gold for immediate delivery lost 0.1 percent to $1,292.54 by 9:06 a.m. in London, according to Bloomberg generic pricing. Prices declined 1.4 percent this week. Gold for December delivery added 0.1 percent to $1,294.30 on the Comex in New York.
Futures trading volume was 13 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show. Prices fell below the 100- and 50-day moving averages this week. The 200-day measure is at about $1,286.14.
Moving Average
“The next level of support for gold may be the 200-day moving average,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a note yesterday. “A break below this level may introduce selling by momentum investors.”
The U.S. said Russia is firing artillery over its border into Ukraine, the first time American officials have publicly alleged direct participation in fighting on behalf of separatists. Israel and Hamas will weigh a U.S.-backed proposal for a temporary cease-fire as the conflict in the Gaza Strip intensified.
Silver for immediate delivery rose 0.4 percent to $20.4557 an ounce in London. It reached $20.3127, the lowest since June 19, and is also set for a second weekly drop. Platinum added 0.3 percent to $1,471.75 an ounce, after falling to a four-week low of $1,463.56 yesterday. Palladium gained 0.4 percent to $874.09 an ounce. It reached a 13-year high of $889.75 on July 17.
Source: Bloomberg
