Gold Breaks $1,200
Source: Reuters, Jan Harvey and Amanda Cooper (8/4/10)
"Fund buying put gold on track for its sixth successive daily gain."
A soft performance on the global equity market and expectations for a rise in Chinese demand were early drivers to the day's rally, although U.S. private sector jobs data pushed up the dollar and diffused some of gold's safe-haven appeal.
Spot gold rose to a high of $1,202.50/oz., its strongest since July 23, and was bid at $1,201.35/oz. at 1353 GMT vs. $1,185.35 late in New York on Tuesday. U.S. gold futures for December delivery rose $16.30 to $1,203.80.
Much of the concern over the eurozone debt burden and the outlook for the global economy has been allayed by an upbeat earnings season and the financial safeguards put in place to protect the banking sector, thereby removing vital catalysts that propelled gold to all-time highs in late June.
But with consumer demand now flourishing in several key regions, such as India and China, analysts expect gold to remain firm this year.
"This is not suddenly the spring board to $1,300/oz. This market is going to pull back and then rally," said Peter Hillyard, head of metal sales at ANZ.
"I'm one of those that believe that by year-end we will see gold with a $1,300-handle. . .that doesn't mean that it can't go back to $1,190 or $1,185 on its way there," he said.
Weak U.S. consumer spending and housing data in recent days have fueled speculation the U.S. Federal Reserve may further loosen monetary policy at its August 10 meeting. This may favor gold, which tends to benefit from a looser economic policy.