Gold climbs towards 2-month high on softer dollar
Singapore, June 27, 2014
Gold climbed towards a two-month high on Friday and looked set to post its fourth straight weekly gain, as weak U. data on consumer spending hurt the dollar.
US consumer spending rose less than expected in May, prompting economists to downgrade estimates for second-quarter growth.
The dollar was poised to end the week with a whimper, dropping to a more than one-month low against the yen on Friday after downbeat U.S. spending data gave investors no reason to hope for higher U.S. rates anytime soon.
Spot gold rose 0.3 percent to $1,321.60 an ounce by 0645 GMT, after losing 0.1 percent in the previous session.
Earlier in the week, it hit $1,325.90 - its highest since mid April.
"The technical profile suggests potential for a near-term push to the $1,370-72 area," ANZ analysts said. "But this would be seen as a medium-term range-defining move, rather than a reversal in the downtrend."
Traders warned the metal could still see some choppy trading amid concerns over weak imports in top consumer China and the discovery of $15 billion of loans tied to falsified gold deals in the country.
Chinese gold processing firms have used falsified gold transactions since 2012 to borrow 94.4 billion yuan ($15.2 billion) from banks, the country's chief auditor said.
Most commodity-financing deals are legitimate, but revelations of borrowing based on fake transactions in the gold market, on the heels of alleged metals financing fraud at Qingdao Port, may prompt authorities to launch another crackdown on commodity financing.
"It's a wait and see situation for now but if and when these gold deals do begin to unwind, there could be an easing of imports though not a sharp decline," said one trader in Shanghai.
China's gold imports from Hong Kong are already at lower levels, with overseas purchases in May dropping to their lowest since January last year as the pace of buying calms after a record 2013.
The Shanghai trader said despite recent sluggish demand, overall appetite for gold remains strong. Chinese demand has been quiet in recent months as a weaker yuan has dulled the appeal of the metal.
Demand in major consumer India has also been subdued as the industry awaits a possible roll-back of import rules. – Reuters