Gold Hit Eight Week High On Downbeat U.S. Data

NEW YORK (Aug 19)  Gold futures rallied to an eight-week high on Friday, after a series of downbeat U.S. economic data dampened speculation the Federal Reserve will begin to taper its bond-buying program as soon as September. Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected. Gold found support after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5. Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month. Gold traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases. Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months. An exit from the stimulus would deal a heavy blow to gold, which has thrived on demand from investors who buy gold to hedge against the inflationary risks of loose monetary policies.