Gold edges up after drop to five-week lows
San Francisco (Mar 25) Gold futures closed with a modest gain Tuesday as declines in monthly U.S. home sales and prices drove some safe-haven demand for the metal, helping the metal edge up from a more than five-week low.
Gold for April delivery /quotes/zigman/10060693/realtime GCJ4 +0.02% rose 20 cents to settle at $1,311.40 an ounce on the Comex division of the New York Mercantile Exchange. May silver /quotes/zigman/10480467/realtime SIK4 -0.43% , however, shed nearly 9 cents, or 0.4%, to $19.98 an ounce, extending losses to a seventh-straight session to settle at a level not seen since early February.
“Minor economic news, such as new home sales coming in lower than anticipated along with higher than expected consumer confidence” presented a “mixed bag” today, said Jeffrey Wright.
The driving force behind gold Monday was more of a “minor consolidation around the $1,300 support level ahead of April options expiration day on Wednesday,” he said. “There is a large open interest at the $1,300 strike, which can lead to an expiration close at, or near, to the strike price.”
A gauge of U.S consumer confidence rose to 82.3 in March, from an upwardly revised 78.3 in February. The March reading came in well above the 78.4 expected by economists polled by MarketWatch.
But new homes in February sold at an annual rate of 440,000 in February, down 3.3% from January’s one-year high. Data released earlier Tuesday also showed that U.S. home prices slipped in January for a third straight month after a harsh winter.
Signs of physical demand
Meanwhile, gold holdings in the SPDR Gold Trust exchange-traded fund /quotes/zigman/41663/delayed/quotes/nls/gld GLD +0.18% climbed on Monday to 821.5 metric tons, up 4.5 metric tons from Friday.
“This is the second business day in a row that we have seen a purchase of over 4 tonnes,” said Julian Phillips, founder of and editor of GoldForecaster.com. “We are surprised by this and read it as an institutional investment in the face of deteriorating political global conditions as the impression is given that the confrontation between Russia and the West is going to worsen.”
“The fall in the gold price, in the face of the above, was surprising but consistent with a correction, after a change in trend in the gold price. To us it now appears overdone,” he said in a daily note. Shares of GLD edged up by 0.1% in afternoon dealings. Gold and silver miners followed the broader equities market higher, with the Philadelphia Gold and Silver Index /quotes/zigman/1475600/realtime XAU +0.65% adding 1.1%.
In another sign of strong physical demand, Iraq has purchased 36 metric tons of gold this month, its largest purchase in three years, according to news reports Tuesday.
“It is very large in tonnage terms and Iraq’s purchases this month alone surpass the entire demand of many large industrial nations in all of 2013,” said Mark O’Byrne, a Dublin-based director at GoldCore, adding that based on GFMS data, “it is just below the entire gold demand of voracious Hong Kong for all of 2013. Read why gold is a good tool to hedge emerging-market risks.
“Signs that the global economy is slowing down and the most serious confrontation between Moscow and the U.S. and its allies since the end of the Cold War is likely to lead to central banks continuing their foreign exchange diversification,” he said.
Source: MarketWatch
