Gold rises amid Fed tapering worries, lack of data
NEW YORK (Aug 14) Gold was seen higher while silver rallied as markets remained uncertain as to whether the Federal Reserve (Fed) would scale back its monetary stimulus in the near future as US retail sales data showed solid figures on Tuesday. Fresh comments from Atlanta Fed President Dennis Lockhart failed to give a clearer picture about the possibility of the highly anticipated September tapering.
Amid a lack of influential US economic data on Wednesday, gold traders will focus on upcoming releases such as the consumer prices report, housing starts, consumer confidence and industrial production scheduled for later this week.
Gold futures traded 0.49% higher to $1,327.10 an ounce as of 10:06am EDT, while silver surged 1.15% to $21.485 an ounce.
The US dollar index, measuring the relative strength of the greenback against a basket of six major currencies, edged down 0.09% to 81.697 at the same time, helping the precious metal to regain its appeal.
Holdings in SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, remained unchanged at 911.13 tons on Tuesday for a second day in a row. Holdings in the trust rose on August 9 for the first time since early June. The volume of holdings fell under 1,000 tons in June for the first time in more than four years.
Mixed gold price predictions
Gold prices pared some gains and rebounded from a 34-month low on June 28. In the first half of the year, when gold lost around one quarter of its value, consumption in China, the second-largest bullion consumer, rose 54%. This physical buying from Asia supported bullion and prevented prices from falling further.
Analysts are divided on possible gold prices in the future. Some anticipate that gold may climb back to $1600 by the end of this year while others expect prices for bullion to fall further down to $1050 by the end of next year.
Producer prices flat
Selling prices among US producers stayed flat in July, while economists' forecast pointed to a 0.3% growth, slowing down from the previous month's 0.8% rise.
The Producer Price Index (PPI) advanced 2.1% year-on-year, while consensus had pointed to a 2.4% gain. In June, the figure grew 2.5%.
Omitting food and energy, the measure, referred to as core inflation, also decelerated from a month before, edging just 0.1% higher. Economists predicted the indicator had kept June's pace of 0.2%.
The core year-to-year indicator revealed a 1.2% rise, in comparison with market expectations suggesting a 1.3% growth. The previous month's PPI unveiled a 1.7% increase.
