Gold climbs in London on global slowdown signs, weaker dollar
Friday, 16 July 2010
LONDON, July 15 (Bloomberg): Gold gained in London on signs of slower growth in the US and China and speculation that a weakening dollar will boost demand for the metal as an alternative investment.
The Federal Reserve Wednesday cut its forecast for the US economy's expansion, and China said the pace of growth dropped in the second quarter. The dollar fell to a nine-week low against the euro Thursday. Gold, which typically moves inversely to the greenback, is trading 4.1 per cent below a record set last month.
"The safe-haven part for demand is important and will be the most important thing to watch in the next few weeks," said Dan Smith, an analyst at Standard Chartered Plc in London. "Gold seems to be reverting back to its relationship with the dollar. There is also an argument that the selloff in gold from its high was overdone."
Gold for immediate delivery added $5.60, or 0.5 per cent, to $1,213.90 an ounce at 9:58 am in London. Bullion for August delivery was 0.6 per cent higher at $1,213.80 on the Comex in New York.
China's economic growth slowed to 10.3 per cent after the government succeeded in tempering credit expansion, investment spending and property speculation. That compares with an 11.9 per cent gain in January-March from a year earlier. Inflation cooled to 2.9 per cent in June, and industrial output rose a less-than-estimated 13.7 per cent.
Fed policy makers said the outlook had "softened somewhat" and that risks to the recovery had risen, according to the minutes of a June 22-23 meeting released Wednesday. US central bankers lowered their central tendency forecast for growth this year to a range of 3 per cent to 3.5 per cent from 3.2 per cent to 3.7 per cent in April, the minutes showed.
Sales at US retailers dropped 0.5 per cent in June, more than projected, after declining 1.1 per cent in May, Commerce Department figures showed Wednesday in Washington.
"The modest and uneven pace of economic recovery, reinforced by the Fed's minutes and weak retail-sales figures, may drive investors to seek out gold as a form of portfolio insurance," said Ong Yi Ling, a Singapore-based analyst at Phillip Futures Pte.
Gold is up 11 per cent this year and is set for a 10th straight annual increase, the longest run of gains since at least 1920. The metal reached a record $1,265.30 an ounce on June 21 as investors sought to protect their wealth against the crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.
The Federal Reserve Wednesday cut its forecast for the US economy's expansion, and China said the pace of growth dropped in the second quarter. The dollar fell to a nine-week low against the euro Thursday. Gold, which typically moves inversely to the greenback, is trading 4.1 per cent below a record set last month.
"The safe-haven part for demand is important and will be the most important thing to watch in the next few weeks," said Dan Smith, an analyst at Standard Chartered Plc in London. "Gold seems to be reverting back to its relationship with the dollar. There is also an argument that the selloff in gold from its high was overdone."
Gold for immediate delivery added $5.60, or 0.5 per cent, to $1,213.90 an ounce at 9:58 am in London. Bullion for August delivery was 0.6 per cent higher at $1,213.80 on the Comex in New York.
China's economic growth slowed to 10.3 per cent after the government succeeded in tempering credit expansion, investment spending and property speculation. That compares with an 11.9 per cent gain in January-March from a year earlier. Inflation cooled to 2.9 per cent in June, and industrial output rose a less-than-estimated 13.7 per cent.
Fed policy makers said the outlook had "softened somewhat" and that risks to the recovery had risen, according to the minutes of a June 22-23 meeting released Wednesday. US central bankers lowered their central tendency forecast for growth this year to a range of 3 per cent to 3.5 per cent from 3.2 per cent to 3.7 per cent in April, the minutes showed.
Sales at US retailers dropped 0.5 per cent in June, more than projected, after declining 1.1 per cent in May, Commerce Department figures showed Wednesday in Washington.
"The modest and uneven pace of economic recovery, reinforced by the Fed's minutes and weak retail-sales figures, may drive investors to seek out gold as a form of portfolio insurance," said Ong Yi Ling, a Singapore-based analyst at Phillip Futures Pte.
Gold is up 11 per cent this year and is set for a 10th straight annual increase, the longest run of gains since at least 1920. The metal reached a record $1,265.30 an ounce on June 21 as investors sought to protect their wealth against the crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.