Gold rose to its strongest in more than a month on Monday as pessimism about the global economic recovery sparked buying from investors, but selling from jewellers could cap gains. Holdings in the world's largest bullion-backed ETF, SPDR Gold Trust, were unchanged, suggesting that some investors were happy to hold on to bullion after recent US economic data pointed to weakness in the economy.
Spot gold added $5.60 to $1,220.10 an ounce by 0634 GMT, having hit an intraday day high of $1,220.60 - its highest since July 2. Bullion struck a record around $1,264 in June. "Our in-house analysts have been bullish on gold because of the state of the global economy," said a physical dealer in Singapore who trades gold bars. "They are still looking at gold reaching $1,300 and they want us to buy gold on dips."
"But we do see selling from the physical side because they are price sensitive. There is selling from Thailand and Indonesia. I guess the buying is more from investors, and not from jewellers." US gold futures for December delivery rose $5.7 to $1,222.3 an ounce, extending Friday's gains, when weak US economic data prompted investors to buy gold as an alternative investment.
Despite the current uptrend in the gold market, some investors might have factored in the bad news from the United States and may start looking for fresh impetus to help bullion challenge a July high of around $1,222. "For the next two weeks we expect gold to trade in a range between $1,180 and $1,240 an ounce. The downside gets very critical only once the metal falls below the $1,150 mark," said Heraeus in a report, referring to a low seen in April.