Gold hit a new record high on Tuesday as a weaker than forecast US consumer confidence reading boosted the metal's safe haven appeal and sent the dollar to fresh five-month lows versus the euro. Silver edged back near a 30-year high, while platinum and palladium ticked higher.
Spot gold rose to $1,307.70 an ounce, its highest ever level. It traded at $1,307.00 at 1530 GMT versus $1,296.05 late in New York on Monday. US gold futures for December delivery rose to a record $1,309.20 an ounce, and later traded up $9.70 to $1,308.50 an ounce.
The Conference Board said earlier a deteriorating labour market and business conditions drove its index of consumer attitudes to 48.5 in September, its lowest level since February. "Our economists were pessimistic but expected a drop to 50 only, far below 50 is a big disappointment," said Daniel Briesemann, analyst at Commerzbank. He added the reading, coupled with other weak data points on the US economy, mean there will likely be more quantitative easing measures by the Federal Reserve before the year-end.
Data earlier this session showed US single family home prices dipped in July while the Richmond Fed's composite manufacturing index sank in September. The dollar hit fresh five-month lows versus the euro after the confidence data, making dollar-priced gold cheaper for European investors. Many traders expect the dollar's downtrend to continue on a view that any future quantitative easing, even in a modest form, would probably still be more aggressive than moves by other central banks.
"The growing realisation that ultra loose monetary policies may debase currencies is leading to continuing safe haven demand for gold. Gold is the only currency that cannot be debased and its value is not dependent on the performance of politicians and central bankers," said analysts at GoldCore in a note. "Problems with the periphery economies in the eurozone are not abating and appear to be spreading," they added.
Investor attention will now turn to manufacturing purchasing manager indexes for a number of key economies and a US core inflation reading due on Friday. Gold is poised to benefit if the data fails to allay fears over the health of the global economy, especially given new concerns over Ireland's debt and fresh speculation that Spain may be downgraded by Moody's.
"I expect gold will make new highs during the final quarter of this year, driven by the threat of quantitative easing and more demand from the jewellery industry," said Quantitative Commodity Research analyst Peter Fertig. In industry news, the average forecast of delegates polled at the end of London Bullion Market Association annual conference said gold prices are likely to stand at $1,450 an ounce in a year's time.
Silver rose to $21.65, its highest point in three decades. It later traded at $21.62 an ounce versus $21.38 late in New York on Monday. The London Metal Exchange and LCH.Clearnet said on Tuesday they aim to introduce a clearing service for over-the-counter trading in silver next year, following the launch of their gold clearing service in November. Platinum was at $1,635 versus $1,627.35 while palladium was at $556.50 versus $548.68.