Gold rose on Wednesday after the latest US economic data fed fears of a long recession, though trading desks were thinly staffed with many participants already gone for the Christmas holiday, traders said. Spot gold advanced to $845.80 an ounce in late trade in New York from $836.90 the previous session.
February gold futures rose $9.90 to settle at $848.0 an ounce on the COMEX division of the New York Mercantile Exchange. The trading band was tight and activity exceptionally light in pre-Chirstmas holiday conditions, traders said. Gold rallied in New York after the latest US economic readings reinforced fears of an extended recession.
"Gold is clearly signalling in its pricing that it does not believe the Fed will be able to pull us out quickly," he said. Gloomy US data weakened the dollar which, also added to gold's gains in early New York business. The dollar fell against most major currencies after data on unemployment, spending and durable goods reinforced a bleak outlook for the US economy, but its declined against the euro was modest.
The number of people filing unemployment benefit claims last week reached a 26-year high and consumers cut spending for the fifth month in a row. At the same time, US orders for long-lasting manufactured goods fell 1 percent in November, a less severe drop than forecast, though still showing contraction.
"I don't think we are going to have any major reassessment of the US economic situation based on today's data. All in all, the scenario remains pretty weak," said Daniel Katzive, director global foreign exchange at Credit Suisse in New York. If the dollar had taken more of a hit from the euro, gold may have been able to add to its gains. "The only real negative is that the dollar wasn't really weak. If the dollar was weaker you'd probably have gold up $15 or $20," said McGhee.
Analyst James Moore at Thebulliondesk. com in London said he thinks gold should find support around $828, though the market is likely to remain vulnerable to pockets of cash generating year-end liquidation over the next few days. Bullion reached a two-month high of $881.20 an ounce last week, bringing its December gains to nearly 20 percent.
Spot platinum cut gains to $849.50 in late business, still up from $841.50 on Tuesday. Spot palladium rose to $174.0 an ounce from $171.00 on Tuesday. Silver was higher at $10.32 an ounce in late Wednesday business than $10.23 on Tuesday.
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