Gold holds steady near $1,250/oz after U.S. data

By Jan Harvey

LONDON (BestGrowthStock) – Gold held steady near $1,250 an ounce in Europe on Monday as expectations for a rise in physical demand going into the fourth quarter supported prices, and as disquiet over the outlook for economic growth persisted.

Spot gold was bid at $1,249.10 an ounce at 11:31 a.m. EDT, against $1,248.04 late on Friday. U.S. gold futures for December delivery firmed 20 cents to $1,251.30. Trading was muted during the U.S. Labor Day holiday, analysts said.

A report on Friday showing U.S. payrolls declined by less than expected last month knocked gold briefly lower, though prices proved resilient in later trade. The data is continuing to support equity markets and higher-yielding currencies.

“Gold has done quite well given what has gone on in currencies (and) equities,” said Michael Lewis, head of commodities research at Deutsche Bank.

“We still like the bullish gold view. There is no interest rate support for the dollar, so the dollar will fall. Real rates will remain low. Equity markets, even when they go up, are still a bit skittish.”

The euro dipped on Monday as short-term players were squeezed out of long positions after the single currency touched a three-week high against the dollar, buoyed by Friday’s stronger than expected payrolls data.

European equities extended the previous session’s gains on optimism after last week’s U.S. jobs data, with world stocks climbing on hopes that a slip back into recession could be avoided.

Meanwhile gold demand in India was solid, dealers reported, after the rupee rose to a two-week high, making dollar-quoted assets cheaper for local buyers.

“Gold is sitting in a very tight range,” said VTB Capital analyst Andrey Kryuchenkov. “The downside will be limited because of seasonality, with Asian buyers really looking to buy on any dips.”

India, the world’s biggest consumer of the yellow metal, has recently entered the traditionally strong festival period for bullion consumption, which began with Raksha Bandhan in late August and lasts through November with Dhanteras.

PALLADIUM SHINES

Among other commodities, oil slipped toward $74 per barrel as the end of the U.S. driving season and high levels of unemployment in the world’s biggest oil consumer raised concerns over the outlook for demand.

But gains in base metals helped underpin industrial precious metals such as platinum and palladium, which are widely used in the automotive industry. Palladium posted its strongest weekly rise since late July last week, with gains of 5.7 percent.

On Monday, platinum was at $1,557.25 an ounce against $1,553.40 and palladium at $527 against $526.68.

Palladium’s gains last week helped push the ratio of platinum to palladium — the number of ounces of palladium needed to buy an ounce of platinum — to a low of 2.94 on Friday, its lowest level since the second quarter of 2004.

Both metals benefited from data last week that showed a hefty rise in Chinese car sales in August. Chinese cars predominantly use petrol engines, which have a higher loading of palladium than platinum.

Meanwhile, silver was little changed at $19.89 an ounce ounces versus $19.87. Friday’s Commitment of Traders report on New York precious metals positioning showed a rise in net long positions in silver.

“Unsurprisingly silver’s recent price rally is closely tied to Comex positioning,” said UBS analyst Edel Tully in a note. “We continue to like silver; seeing it playing a role as poor man’s gold but also benefiting when risk-on appetite returns.”

(Reporting by Jan Harvey; editing by Jane Baird)

Gold holds steady near $1,250/oz after U.S. data