Gold hits 8-week high; growth worry persists
Singapore, August 26, 2010
Gold rose to its strongest in eight weeks on Thursday as the dollar slipped against the euro, with worries that the US economic recovery was stalling likely to drive the metal to new highs.
Silver rose to its highest in nearly two months as its cheaper price versus other precious metals attracted bargain buying. Platinum group metals held near New York levels ahead of the release of US initial jobless claims data.
Spot gold added $2.30 to $1,241.30 an ounce by 0546 GMT, having hit a high of $1,241.65, its highest since early July. Gold struck a lifetime high around $1,264 in June, partly driven by worries about a slowdown in the US economy.
'Gold is reluctant to weaken considerably and looks for every opportunity to strengthen. I still don't see it really moving substantially lower in the short term, while the ETF investors are still on board,' said Darren Heathcote, head of trading at Investec Australia in Sydney.
'Whilst we are getting any negative data, you can expect gold to benefit.'
US gold futures for December delivery rose $1.8 to $1,243.1 an ounce, having also hit an 8-week high. Recent poor economic data from the United States, including weaker-than-expected US durable goods orders, stoked fears of a double-dip recession, which prompted some investors to ditch stocks and shift to bullion.
Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, jumped nearly 13 tonnes last week, its biggest one-week climb since early June.
'I think there is a possibility for gold to test a new high because we've managed to break through the $1,240 mark,' said a dealer in Singapore. 'Silver is also tracking gold, because historically, there's a high correlation between the two.'
The US dollar was under pressure on Thursday after the previous day's poor data fed fears the world's biggest economy was at risk of another downturn, while a weaker yen spurred buying on TOCOM gold futures. - Reuters