Gold has recorded its longest rally since October as demand for metal grows. A surprise jump in US jobless claims has also helped the metal as the economy shows that it is struggling to improve, which may eventually lead to more stimulus measures by the Federal Reserve.
By Debarati Roy
Jun 14, 2012 12:06 PM MT
Gold futures rose, capping the longest rally since October, on demand for a haven as a widening U.S. current-account gap and a surprise increase in jobless claims signaled that the economy is struggling to improve.
The current-account deficit widened in the first quarter to the biggest in three years, and claims for jobless-insurance benefits unexpectedly rose by 6,000. Gold climbed to a one-week high, partly on speculation that the Federal Reserve will take more steps to buoy the economy.
“The expectations of the Fed doing something grew after the current-account data and the jobless data point toward some slowdown,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “People are looking to position themselves in gold as the uncertainties around are growing.”
Gold futures for August delivery advanced 20 cents to settle at $1,619.60 an ounce at 1:59 p.m. on the Comex in New York. The price rose for the fifth straight session, the longest rally since late October. Earlier, the metal reached $1,629, the highest for a most-active contract since June 7.
The commodity rebounded after dropping as much as 0.6 percent.
Fed policy makers start a two-day meeting on June 19 to review monetary policy, convening after weekend elections in Greece that may determine whether the nation remains in the group of countries that use the euro.
Alexis Tsipras, whose Syriza party in Greece is vying for first place in pre-election polls, said he expects the European Union will do all it can to keep the nation in the euro. He has promised to repeal the austerity measures required to receive emergency loans.
“People are also expecting some kind of coordinated effort in Europe,” Klopfenstein of Archer Financial said.
Silver futures for July delivery fell 1.8 percent to $28.407 an ounce.
On the New York Mercantile Exchange, platinum futures for July delivery rose 1.4 percent to $1,487.60 an ounce. The price climbed for the fourth straight day, the longest rally in a month.
Palladium futures for September delivery gained 1.9 percent to $634.90 an ounce.
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