Gold climbs on fears of economic slowdown

Gold climbs on fears of economic slowdown
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First Published: Tue, Mar 20 2007. 12 26 AM IST
Updated: Tue, Mar 20 2007. 12 26 AM IST
London: Gold climbed for a fourth consecutive session on speculation that slowing US economic growth and quickening inflation will spur demand for the metal as an alternative to stocks and bonds.
Gold had its biggest gain in a week on 16 March after government and industry reports showed rising US consumer prices and declining consumer confidence. Reports this week may show sales of existing homes declined and construction of new ones stayed near a nine-year low last month.
“Gold is well-placed to rally, particularly with the US economy seeing not only trouble in the housing market but also inflation,” said James Moore, an analyst at London-based TheBullionDesk.com.
Gold for immediate delivery rose $1 to $654.40 an ounce at 10:48am in London. Prices are up 1.6% since 13 March. Hedge funds and other large speculators reduced their “net long” positions, or bets on higher prices, in New York and Chicago for a second consecutive week, US Commodity Futures Trading Commission figures last week showed. Gold is likely to drop to $640 in “the next week or so” as the selling continues, said John Reade, head of metals strategy at UBS AG’s investment-banking unit.
The dollar weakened last week to the lowest this year against the euro and dropped against the yen on speculation a slowing US economy is reducing the appeal of US assets.
Sales of existing homes probably fell 2.5% to an annual rate of 6.3 million last month, according to the median estimate of economists surveyed before a 23 March National Association of Realtors report.
A report from the commerce department on 20 March may show housing starts rose to a 1.45 million annual pace from a 1.408-million rate that was the lowest since August 1997.
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First Published: Tue, Mar 20 2007. 12 26 AM IST
More Topics: Money Matters | Commodities |