Gold rallied to a three-week high above $900 an ounce on Thursday as Wall Street equities extended losses after data showed US existing home sales fell to a much lower-than-expected annual rate in March. Falling stocks and ongoing jitters over the health of the US economy are enhancing the precious metal's appeal as a haven from risk, while physical demand is picking up in major consumer India ahead of a key festival, analysts said.
Gold hit a high of $907.10 an ounce in the immediate wake of the data, its firmest since April 3, and was bid at $904.50 per ounce at 1502 GMT against $889.15 late in New York on Wednesday. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $14.70 to $906.50 an ounce. "The data is a bit disappointing for the market," said BNP Paribas analyst Michael Widmer. Gold climbed on the news, then jumped after breaking technical resistance just below $900 an ounce.
Meanwhile the International Monetary Fund on Wednesday slashed its growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession. But gold has held between $870-900 in recent sessions, struggling to gain traction as buying of gold-backed exchange-traded funds stalled.
Holdings of the world's largest gold ETF, the SPDR Gold Trust, are at 1,105.98 tonnes, having recently seen their largest outflows since last autumn. "For gold to be really moving on the upside you've got to see more money coming into ETFs to justify that, and that has not been the case for some weeks now," Simon Weeks, director of precious metals at the Bank of Nova Scotia, said.
Gold-backed exchange-traded funds saw inflows of 456 tonnes in the first quarter of 2009, against a total 321 tonnes for the whole of the previous year, the World Gold Council said on Thursday. Silver tracked gold higher, rising almost 5 percent to its session peak of $12.86. It was later at $12.74 against $12.28. Among other precious metals, platinum was bid at $1,175.50 an ounce against $1,168.50 and palladium was at $230.50 an ounce against $230.
Metals consultancy GFMS said in a closely watched report on Thursday that platinum group metals will take little support from their supply and demand fundamentals this year, but could benefit from investment demand if gold climbs. The group said it expects platinum to trade in a range of $900-$1,375 in 2009, and palladium to stay between $170-$325.