| 7 August 2012-Gold edges higher on weaker $US |
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Gold edges higher on weaker $US Gold futures have edged higher as a slight pullback in the US dollar continued to push investors into precious metals. The most actively traded contract, for December delivery, on Monday rose $US6.90, or 0.4 per cent, to settle at $US1,616.20 a troy ounce on the Comex division of the New York Mercantile Exchange, a second consecutive session of gains. Gold's rise has come as investors moved out of the US dollar and into assets seen likely to benefit from higher-than-expected global growth. Gold rose by more than one per cent Friday, tracking a rise in growth-sensitive assets after a better-than-expected reading on the US labour market. It gained again on Monday as the US dollar eased slightly against the euro on optimism about Europe's banking crisis. Trading volume was light on Monday, with activity in gold on pace for the slowest day since December, according to preliminary exchange data. The calm came after gold's wild ride last week, which saw the metal move between about $US1,628 an ounce and $US1,580 an ounce as investors reacted to European Central Bank (ECB) and Federal Reserve (Fed) policy meetings, as well as the latest, closely watched US monthly employment report. Despite gold's recent gains, analysts with Morgan Stanley said the persistent strength in the US dollar this year "threatens to undermine the growth in gold investment demand". The bank cut its fourth quarter gold price forecast by 13 per cent Monday, to $US1,750 an ounce. Gold and the US currency tend to move inversely, as some investors seek the metal as a hedge against declines in the US dollar, and a stronger dollar makes gold investment more expensive for buyers using other currencies. The US dollar, despite its recent weakness, has climbed against currencies of some major US trading partners this year, as investors sought the perceived safety of US government debt amid Europe's debt crisis and the Federal Reserve refrained from implementing further monetary easing that could weaken the currency. That's put pressure on gold, analysts say. Futures climbed near $US1,800 a troy ounce in February before retreating on a lack of Federal Reserve stimulus. Through Friday, gold was up about two per cent in 2012. The latest disappointment to gold bulls came last week, as the Fed stood pat on its previously announced policies instead of announcing new measures. Signs of weakening US economic growth had spurred speculation that the central bank would announce new measures, potentially weakening the dollar and lifting gold. Barclays analysts Suki Cooper and Lynnden Branigan said in a note that they "put probability of QE3 at roughly one in three," referring to a third round of Fed bond buying, or quantitative easing. |
