Gold recouped losses on Tuesday and rallied for a third day, hitting two-month highs after more data suggested the US economy is running out of steam and a flurry of end-of-month buying lifted prices. Gold is on track to post its biggest monthly percentage gain since April in August, after a raft of soft US economic data lifted its appeal as a haven from risk.
-- Gold on track for biggest monthly gain since April Spot gold was bid at $1,244.15 an ounce at 1430 GMT, against $1,236.66 late in New York on Monday, having hit a new session peak of $1,247.50, its highest since late June. US gold futures for December delivery rose $7.0 an ounce to $1,246.00. "People are fearful enough of what else is going on in the economy and that is sufficient to justify what is going on in gold," said Peter Hillyard, head of metal sales, Europe at ANZ.
"It's a bit of a continuation of what is going on in other markets with month-end and I think $1,300 is on the cards...certainly for September," he said. Data on Tuesday showed a slowing in business activity in August in New York City, the home of Wall Street, while consumer confidence rose in August and prices for US single-family homes staged a larger rise than expected in June and rose in the second quarter.
So, the chances are high for gold to rise above its all-time high of $1,264.90 an ounce later this year, analysts said. "We are lacking momentum at the moment," said Credit Suisse analyst Tom Kendall. "Looking through to September and beyond, we expect to see new highs in dollar terms. But short term, we have to consolidate."
Among other commodities, oil prices eased below $75.00 a barrel, hurt by expectations that crude inventories would rise, reflecting lower demand from the United States. Base metals also slipped. Among other precious metals, silver followed gold's lead, rising by more than 1 percent to around $19.20 an ounce, up from $18.96 late on Monday. Silver has gained nearly 7 percent in August, its best monthly performance since a 13.1 percent gain in November 1999. Platinum was at $1,524.00 an ounce against $1,525.20, while palladium was at $494.00 against $493.93.
The auto-catalyst metals have come under pressure from concerns weakness in economic growth will weigh on demand for raw materials. However, they are sensitive to supply threats, especially platinum. But analysts say the metals, particularly platinum, may get support from the threat of supply disruptions. South Africa's National Mineworkers Union said on Tuesday workers might strike at Northam Platinum for higher wages. "Should the current strike of public workers in South Africa spread to the mining companies, this could give prices fresh tailwind," said Commerzbank in a note.