Gold prices inch towards $940
Gold rose towards $940 on Friday as it continued to benefit from a weaker U.S. dollar, which has lost its allure as a safe-haven asset amid hopes for an economic recovery stoked by solid corporate earnings.
The precious metal is on course for a roughly 1.4 percent fall on the week, but is off a two-week low of $925.10 touched on Wednesday, when rising risk aversion due to gloomy U.S. economic news boosted the dollar.
For the month, it is on track for a 1.3 percent rise.
“Gold’s getting a bit of a bounce for now after last night’s weakness in the dollar,” said Adrian Koh, an analyst at Phillip Futures in Singapore.
A weaker dollar also makes gold cheaper for holders of other currencies.
Gold was at $937.35 an ounce at 0307 GMT, up 0.4 percent from the New York notional close of $933.30.
“For the near term, I think gold’s very much still in a sideward consolidation mode and the next key supports are likely to come in around the $910-$920 regions,” he said.
U.S. gold futures for August delivery were at $937.6 an ounce, up 0.3 percent.
On Friday, first delivery of the August contract begins and December gold futures become the new benchmark.
Gold’s activity was relatively subdued, however, before the U.S. government’s advance report on second-quarter gross domestic product, due to be released at 1230 GMT, which could shed further light on the health of the economy.
A Reuters poll of economists gave a median forecast of a 1.5 percent contraction in the U.S. economy in the second quarter.
The dollar slipped on Friday as growing hopes for a global recovery prompted investors to pick up riskier assets such as stocks.
Japan’s Nikkei stock average hit a 10-month high on Friday, with sentiment increasingly positive after a slew of solid earnings announcements.
U.S. crude oil recouped early losses to trade above $67 per barrel, after rising close to 6 percent the previous day as strong U.S. economic data sparked fresh optimism about the economic outlook.
Investment demand for gold remained weak with holdings in the world’s largest gold-backed exchange-traded fund down nearly 48 tonnes in the last four weeks.
The SPDR Gold Trust said holdings stood at 1,072.87 tonnes as of July 30, unchanged from the previous business day, when they fell about 1 percent.
Analysts fear a broader liquidation of ETF gold holdings resulting from a recovery in risk appetite could jeopardise gold’s gains.
Gold demand in India, the world’s top consumer, is recovering but remains weak.
The Bombay Bullion Association said on Thursday that gold imports into India in the first 30 days of July were between 8 and 10 tonnes.
Source: Reuters