Gold advanced to trade near a record as weak US economic data boosted demand for a haven amid concern about the strength of the recovery.
Bullion gained as much as 0.4 per cent to $US1279.45 an ounce, after reaching an all-time high of $US1282.97 on Sept. 17 when the dollar fell to a five-week low against the euro and a report showed a drop in consumer sentiment. The metal often moves in the opposite direction to the US currency.
“There is still a little bit of concern about bits of data and whether we are actually seeing signs of recovery in the US,” Darren Heathcote, head of trading at Investec Bank (Australia) in Sydney, said. “People are sceptical and consequently gold has followed the euro higher.”
The metal may extend its advance to a record this week, according to a Bloomberg survey. Sixteen of 20 traders, investors and analysts surveyed, or 80 per cent, said the metal will gain, two forecast lower prices and two were neutral. Prices may rise to test $US1300 “in the days ahead” after rising above $US1275, Heathcote said today.
Gold for immediate-delivery advanced 0.2 per cent to $US1276.85 an ounce, taking this year's rise to 16 per cent. Silver for immediate delivery gained as much as 0.4 per cent to $US20.8325 an ounce before trading at $US20.8225. The metal reached $US20.995 on Sept. 17, the highest level since March 2008.
The Federal Reserve and the European Central Bank have kept benchmark lending rates at the lowest level ever to revive economic growth and the Fed is this week likely to affirm its pledge to keep rates low for an “extended period,” according to economists surveyed by Bloomberg.
Consumer sentiment
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to a one-year low of 66.6, figures showed Sept. 17. A separate report from the Federal Reserve showed household wealth declined 2.8 per cent in the second quarter as stock prices fell.
The euro was at $US1.3067 after rising last week to $US1.3159, the strongest since Aug. 11
Gold for December delivery was little changed at $US1278.10 an ounce on the Comex in New York after touching a record $US1284.40 on Sept. 17.
Platinum for immediate delivery was little changed at $US1620.13 an ounce after reaching a four-month high of $US1631.50 last week. Palladium was also little changed at $US542.50 an ounce.