Gold nears $1,250/oz as caution sets in

Gold rose on Thursday as overarching concern about growth-linked assets ahead of key US jobs data sharpened investor appetite for bullion, as evidenced by a third straight increase in exchange-traded fund holdings.

Spot gold was bid at $1,250.40 an ounce at 1430 GMT, against $1,243.50 late in New York on Wednesday. US gold futures for December delivery rose $4.60 cents to $1,252.70.

Prices have reached new two-month highs at $1,254.65, this week after a raft of US data suggested the world’s largest economy could be slowing enough to warrant further quantitative easing from the Federal Reserve.

Even flurries of more robust data, such as Thursday’s surprise rise in pending home sales for July or better-than-expected manufacturing data have not whet risk appetite for investors to pare back their gold holdings.

The euro edged up on Thursday, supported by healthy results at Spanish and French bond auctions and after the European Central Bank left euro zone interest rates unchanged and extended its liquidity safety net as concern about the resilience of the banking sector resurfaced.


The world’s largest gold-backed ETF, New York’s SPDR Gold Trust, said its holdings rose to 1,304.028 tonnes on Sept. 1 from 1,302.508 tonnes the day before, having climbed in August after retreating in July.

Investors tend to favour physically backed bullion products as a haven from risk in times of economic or financial market uncertainty, analysts said.

“Monthly ETF inflows turned positive in August; these need to accelerate for gold to overcome potential scrap supply at these prices and rise sustainably through $1,250,” Swiss bank UBS noted in a daily report.

The data coming out of the United States is the key driver for the broader financial markets right now as investors weigh up the chances the world’s largest economy will slip back into recession, which will erode global growth.

US stocks extended gains after the pending home sales figures and the focus for the markets now lies squarely on Friday’s employment report for August.

“US non-farm payrolls will be in particular focus at the end of the week,” said VTB Capital analyst Andrey Kryuchenkov.

Among other commodities, oil fell further below $74 as investors turned their attention to the forthcoming US data, following gains of almost 3 percent a day earlier after positive manufacturing data lifted spirits across markets.

Silver rose by more than 1 percent to $19.52 an ounce against $19.32. The ratio of gold to silver ‑ or how many ounces of silver are needed to buy an ounce of gold ‑ fell to its lowest in 3-1/2 months at 64.29.

Holdings of the largest silver-backed ETF, the iShares Silver Trust, rose 53.27 tonnes on Wednesday, their largest one-day rise since May 13.

Elsewhere, platinum rose to $1,543 an ounce from $1,528, while palladium climbed to $517.00 an ounce from $516.

The metals were supported by strong Chinese car sales numbers, which showed a 59 percent sales rise in August from a year earlier. This helped offset data showing the weakest US August car sales in 27 years.

Carmakers are the largest consumers of platinum group metals, which are widely used in catalytic converters.