Gold extends gains into 4th session, near 1-month top

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Gold rose for a fourth straight day on Tuesday, hovering near a one-month high hit in the previous session, boosted by a weaker dollar and strong buying from China.  Gold has recovered nearly $160 from a three-year low of $1,180.71 an ounce, hit on June 28, after the U.S. Federal Reserve said it would only start phasing out its stimulus once it is sure the economy is strong enough to stand on its own. This allayed fears of imminent cuts to the Federal Reserve’s monthly bond purchases, which is tantamount to printing money and supports gold’s appeal as a hedge against inflation. Spot gold rose 0.1 percent to $1,336.84 by 0332 GMT, after technical buying pushed it past the $1,300 level on Monday. The precious metal is on track for a more than 8 percent jump in July, its biggest monthly rise in 1-1/2 years.
“People are more confident that the downside risk has subsided just a little bit. The message from the Fed was not too worrisome as it was before,” a Hong Kong-based precious metals trader said. “Demand from China is quite healthy and has been a lot more reliable. It’s helping offset some of the losses from India where demand has fallen off.” India, the world’s biggest consumer of gold, has imposed new rules on gold imports this year in an effort to reduce its current account deficit.  China, on the other hand, has been buying consistently, gold dealers have said, pointing to elevated premiums on the Shanghai Gold Exchange. Shanghai gold is about $20 an ounce more expensive than London spot prices, and gold futures were up more than 2 percent on Tuesday.
Spot gold also drew support from a softer dollar that made assets priced in the greenback cheaper for holders of other currencies.
 MORE UPSIDE?
 Despite this month’s gains, gold is down 20 percent for the year – its worst annual performance since 1997.  Analysts polled by Reuters slashed their 2013 gold and silver price forecasts and expect them to remain weak in 2014. Nonetheless, price views for the second half suggest gold’s slide may have bottomed out for now after it hit its lowest in nearly three years last month, according to a survey of 30 leading analysts and traders conducted in July. Gold hit a one-month high of $1,338.91 on Monday as speculators fearing a reversal of the recent downward price trend rushed to buy.
“Should we move along this trajectory, we could conceivably get to $1,460 from here, not necessarily an outlandish target, but one which we think is somewhat of a stretch unless U.S.  macro indicators take a decisive turn for the worst,” INTL FCStone analyst Edward Meir said.
Precious metals prices 0332 GMT

Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1336.84 1.8 0.13 -20.17
Spot Silver 20.43 -0.1 -0.49 -32.53
Spot Platinum 1448.5 8 0.56 -5.64
Spot Palladium 743.97 -0.03 0 7.51
COMEX GOLD AUG3 1336.5 0.5 0.04 -20.25 11378
COMEX SILVER SEP3 20.43 -0.08 -0.39 -32.59 3365
Euro/Dollar 1.3201
Dollar/Yen 99.55

COMEX gold and silver contracts show the most active months

Source: Reuters
Source:Bullion Bulletin

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