Gold hits fresh two-month highs

SINGAPORE. – Gold extended gains to a fourth session yesterday, hitting fresh two-month highs, helped by weak US data and further inflows into the world’s biggest bullion-backed exchange traded fund.The metal has now risen for eight sessions out of nine, gaining 8 percent due to the weaker dollar, short-covering and technical buying. Signs of increasing physical demand and a turnaround in the outflows from gold-backed ETFs have also supported prices.

“Last quarter what was tugging at gold prices was the fight between money managers who are very bearish on gold and physical buyers who were quite bullish. The outlook (for gold prices) is slightly better now as it looks like we have bottomed out on the outflows,” an investment analyst Joyce Liu said.

SPDR Gold Trust, the world’s largest gold-backed ETF, posted a 0,4 percent increase in holdings last week to 915,32 tonnes – its first weekly increase since November 2012.

The fund has seen about US$19 billion in outflows this year, and has weighed heavily on gold prices that have lost nearly a fifth of their value in 2013. Hedge funds and money managers raised net long positions in gold and silver, a report by the Commodity Futures Trading Commission showed on Friday, indicating that investors’ sentiment towards gold may be changing.

Spot gold rose 0,3 percent to US$1 379,51 an ounce by 3.05am GMT, after hitting a two-month peak of US$1 384,10 earlier.
Bullion climbed the most in five weeks last week, posting a 5 percent gain. Silver gained 14 percent – its biggest weekly increase in almost five years.

Liu said charts showed that the momentum for gold prices was still positive. Spot gold was expected to break a resistance at US$1 386 an ounce and rise more to US$1 403, Reuters technical analyst Wang Tao said.

Shanghai gold futures rose more than 2 percent yesterday. Demand from China and India is set to soar to a record 1 000 tonnes each in 2013, the World Gold Council said last week. US consumer sentiment ebbed in August and residential construction rose less than expected in July, potentially dimming hope of an acceleration in economic activity in the third quarter and increasing gold’s safe-haven appeal.

Economic data are being monitored by investors to gauge when the US Federal Reserve would begin tapering its massive stimulus measures. Minutes of the Fed’s July policy meeting are due to be released tomorrow. – Reuters.