LONDON: Gold prices hit their lowest in more than a month yesterday after upbeat US data tempered expectations of the scope of the Federal Reserve’s latest stimulus program, with a failure to break $ 1,800 an ounce prompting some investors to cash in gains.
Data released yesterday showed US retail sales rose in September as Americans bought more of everything, from cars to gasoline and electronics, pointing to stronger-than-expected economic growth in the third quarter.
The report followed news on Friday that US consumer sentiment unexpectedly hit a five-year high, while weekly US jobless claims the previous day showed a surprise drop.
That has called into question the possible extent of the Fed’s latest bond-buying program, which has been explicitly tied to economic needs. It may be curtailed sooner than expected if data is positive enough.
Spot gold was down a percent at $ 1,735.50 an ounce at 1412 GMT, having earlier fallen to as low as $ 1,733.04. US gold futures for December delivery were down $ 22.50 an ounce at $ 1,737.20.
Spot platinum was down 1 percent at $1,626.49 an ounce, while spot palladium was up 0.4 percent at $ 630.97 an ounce.
“The University of Michigan data on Friday, retail sales today — it all adds up to suggest that the US economy is starting to step in line, and the downward revisions we saw in the past half of the year may be coming to an end,” Danske Bank analyst Christin Tuxen said.
“Also (we had) decent data from China with credit growth heading in the right direction, which tends to be a good leading indicator,” she added.
Data from China showed yesterday inflation was subdued in September while exports had rebounded at nearly twice the rate expected, dampening expectations for easing measures in the world’s second largest economy.
“Basically the market is starting to take stock of better than feared data flow coming out over the weekend, and if you then have Spain coming into to ask for a bailout, even if it’s after regional elections, it may be a boost for risk appetite,” Tuxen said.
Gold’s failure to maintain a rally sparked by the latest round of Fed easing measures has sparked some profit-taking among short-term investors, analysts said.
Prices rose 12.3 percent from mid-August, when speculation began in earnest on the prospect of a third round of Fed money printing to buy bonds. They hit a high for the year at $ 1,795.69 in early October, but have failed repeatedly to beat that level.
The dollar offered little direction, little changed versus the euro on uncertainty over when Spain will ask for the bailout it needs to trigger European Central Bank bond-buying measures.
Hedge funds and other big speculators boosted their net longs in gold to the highest level in 14 months, the Commodity Futures Trading Commission said on Friday.
Holdings of gold-backed ETFs, which issue securities backed by physical stocks of precious metal, increased their bullion holdings by some 282,000 ounces last week, marking an 11th week of inflows.
“Many new positions in both exchange-traded funds and futures have been established in recent weeks, especially short term leveraged investors who are not married to their positions in the same sense as long term ETF investors,” Saxo Bank Vice-president Ole Hansen said.
Gold demand in major consumer India picked up a touch as prices fell, as the peak gold-buying festival season, which will peak with Diwali and Dhanteras next month, got under way.
Among other precious metals, silver tracked gold lower, down 1.9 percent at $ 32.81 an ounce.
Mexican miner Fresnillo, the world’s largest primary silver producer, posted a 2.6 percent rise in production in the third quarter compared to the same period in 2011. It said it was on track to meet its 2012 targets of 41 million ounces.
Spot platinum was down 1 percent at $1,626.49 an ounce, while spot palladium was up 0.4 percent at $ 630.97 an ounce.
Confidence in gold rally stalls
