News Column

Gold Ends Higher On Safe Haven Appeal

July 1, 2014

WASHINGTON (Alliance News) - Gold futures moved up for a third successive session to end at a two-month high on Tuesday, with investors opting for the safe haven appeal of the precious metal after some soft manufacturing activity and construction spending data from the US Nonetheless, the gains were limited on some strong showing by global equity markets.

Meanwhile, geopolitical tensions have also helped gold edge higher with fierce fighting reported in eastern Ukraine with government tightening its deployment against the pro-Russian separatists. The clashes intensified after Ukraine President Petro Poroshenko ended a ten-day cease-fire which failed to stem the violence to any satisfactory levels.

In Iraq, the situation continued to remain uncertain with the Iraqi parliament failing to reach an agreement of any kind to defuse the volatile situation in the country.

In economic news, activity in the US manufacturing sector grew at an unexpectedly slower rate in June, a report from the Institute for Supply Management showed Tuesday. Meanwhile, construction spending in the US increased much less than expected in May, according to a Commerce Department report.

Chinese manufacturing purchasing managers' index rose to a six-month high in June after a weak start to the year, a survey by the China Federation Of Logistics And Purchasing and the National Bureau of Statistics showed Tuesday.

Gold for August delivery, the most actively traded contract, gained USD4.60 or 0.4% to close at USD1,326.60 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for August delivery scaled an intraday high of USD1,334.90 and a low of USD1,324.00 an ounce.

On Monday, gold futures ended higher with the dollar trended lower, although gains were limited on concerns over the ongoing violence in Iraq.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to 790.70 tons on Tuesday from its previous close of 785.02 tons.

The dollar index, which tracks the US unit against six major currencies, traded at 79.78 on Tuesday, a tad higher from its previous close of 79.78 late Monday in North American trade. The dollar scaled a high of 79.87 intraday and a low of 79.74.

The euro traded lower against the dollar at USD1.3687 on Tuesday, as compared to its previous close of USD1.3693 late Monday in North American trade. The euro scaled a high of USD1.3700 intraday and a low of USD1.3676.

In economic news from the US, the Institute for Supply Management on Tuesday said its purchasing managers index edged down to 55.3 in June from 55.4 in May, although a reading above 50 still indicates growth in the manufacturing sector. However, economists expected the index to inch up to a reading of 55.8.

Construction spending in the US increased by 0.1% to an annual rate of USD956.1 billion in May from the revised April estimate of USD955.1 billion, a Commerce Department report showed Tuesday. Economists had expected spending to increase by 0.5%. The weak growth was due partly to a drop in spending on private construction, which dipped 0.3% to an annual rate of USD682.8 billion.

Elsewhere, Chinese manufacturing purchasing managers' index rose to a six-month high in June to 51 from 50.8 in May, in-line with economists' expectations.

Meanwhile, eurozone unemployment rate remained unchanged at an elevated level in May as flattening recovery in the second quarter strained job creation, data from Eurostat revealed Tuesday. The jobless rate came in at a seasonally adjusted 11.6% in May after April's figure was revised down from 11.7%. Economists had forecast the unemployment rate to remain at 11.7%.

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Source: Alliance News

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