Gold Holding Steady Against U.S. Data

Wednesday, 27 March 2013
Written by  The Economic Times
Published in Gold Investing
Gold held steady right around the $1,600 per ounce price mark even as a stream of promising and steady U.S. data came through. That. Coupled with the continuing concerns over the Cyprus bailout issues have caused the yellow metal to drop a bit over the last few days, as it may end up losing overall for the week. However, the yellow metal is trying to stay strong and wait for safe haven appeal to come back its way.


Upbeat U.S. data that has come out in recent months has boosted confidence in the recovery of the world's top economy. This has driven investors to high-yielding assets such as equities, while little inflationary pressure has kept gold's appeal as a hedge against rising prices muted.

"It's tough to keep investors in gold, and even tougher to motivate them to buy gold," said Dominic Schnider, analyst at UBS Wealth Management in Singapore.

Gold is likely to remain in consolidation in the next few months, but an improving economic growth could fuel inflation later in the year, which would help lift gold, he said.

"When we get into the second half of the year, there will be growth and there will also be price pressure, which should give gold stimulus towards $1,800 an ounce," said Schnider.

This is some good news coming from Schnider, as many had expected gold to already be at the $1,800 per ounce price level, or above, by this point in 2013. However, with so much going on, including the Cyprus bailout and the ongoing fiscal cliff issues, gold has actually fared pretty well. It will need to make a turnaround though sometime this year if it wants to end the fiscal year up overall and continue its streak of 12 straight years with overall gains.

U.S. gold inched up 0.1 percent to $1,597.40. For the short term, worries about the financial stability of the euro zone after Cyprus clinched a rescue deal that forces losses on depositors and bank bondholders will keep a floor under bullion.

Reflecting the stalled momentum in gold, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,221.260 tonnes for the third session on March 26.

We will see how the last two days of this week play out, but gold will have to make a move soon if it wants to finish this week up overall.

Original Article: Economic Times

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