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Gold edges lower; growth worry supports

Gold edges lower; growth worry supports
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First Published: Mon, Sep 05 2011. 10 43 AM IST
Updated: Mon, Sep 05 2011. 10 43 AM IST
Singapore: Spot gold edged lower on Monday, retaining most of its gains from the previous session, as a dismal growth outlook after the US jobs data supported safe-haven interest in bullion.
US employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy.
The bleak outlook of the world’s largest economy sent anxious investors to safe haven assets including bullion.
“Even if you take out the effect from the Verizon strike, it is still a lousy number and people are concerned that growth is not there any more,” said Dominic Schnider, head of commodity research of UBS Wealth Management in Singapore.
He expected the recession fear to send gold to test its record high above $1,911 hit in late August, and to $2,200 in the next three months.
Technical analysis echoed Schnider’s expectations. Spot gold may rise towards the record of $1,911.46 later in the day, as it has resumed its long-term uptrend, said Reuters market analyst Wang Tao.
Spot gold edged down 0.3% to $1,877.45 an ounce by 8:57am, after surging 3.2% in the previous session. US gold inched up 0.2% to $1,880.50.
Amid concerns about the resurgent debt crisis in Europe, European Commission President Jose Manuel Barroso on Monday said he still expected modest growth in Europe and did not anticipate a recession in Europe.
“The market has been a bit choppy -- some sold to book profit earlier and many are waiting for cues for further stimulus from the Fed,” said a Hong Kong-based dealer.
Market participants will also closely watch US President Barack Obama’s speech on Sept 7 to unveil new economic proposals to Congress.
Money managers cut their net long positions in US gold futures and options for a fourth week in a row in the week ended 30 August, as bullion prices pulled off an all-time high set a week earlier, data showed on Friday.
Spot platinum hit a two-week high of $1,885.50, before easing to $1,869.99.
The platinum-gold spread dipped into negative territory on Friday and remained at a small discount of $7, which may have spurred investors to buy platinum.
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First Published: Mon, Sep 05 2011. 10 43 AM IST
More Topics: Markets | Precious | Gold | Commodites | Bullion |