NEW YORK (
moved higher Wednesday while
fell after disappointing reads on manufacturing activity and job growth in the U.S.
Gold for June delivery added $6.40 to close at $1,543.20 an ounce at the Comex division of the New York Mercantile Exchange. The metal started the day trading lower as investors opted for stocks after markets ended May with a bang, but quickly reversed course after a slew of disappointing data from the U.S. Gold has traded as high as $1,551.60 and as low as $1,530.40 while the spot gold price was up $9.60 according to Kitco's gold index.
Silver prices stemmed losses but still ended 61 cents lower to $37.69 an ounce while the U.S. dollar index was slightly higher at $74.58.
Gold and silver prices diverged after the ADP employment report said that only 38,000 jobs were added in May and April's figure was revised down by 2,000 to 177,000. The news sparked more interest in gold as a safe haven asset, which was underscored by weak manufacturing numbers from China, the Eurozone and U.S. Slowing manufacturing data worldwide curbed demand for silver, primarily an industrial metal.
Investors are also considering whether Germany will allow Greece to secure an additional €60 billion, that's on top of the country's current €110 billion bailout, without asking bondholders to delay getting their money back. If that happens, Greece could avert a default and help cheer investors.
"The apparent change in Germany's stance towards Greece's debt may help to underpin risk appetite in the coming sessions, weighing on gold," says James Moore, research analyst at FastMarkets, "However, speculation the U.S. economy is slowing may be positive to gold."
A worsening U.S. economy, especially if Congress can't reach an agreement to raise the debt ceiling, might not only prevent the
from raising interest rates but also force the central bank to pump more money in the system simply to help the government cover its upcoming interest payments, which currently are $244 billion for 2011, according to TreasuryDirect.com.
reported Wednesday that
analysts think a lethal combination of stronger equities, a stronger Treasury market and weaker dollar are pricing in more free money into the system. Low rates and more cash are the perfect recipe for gold and silver, although silver is also subject to hints of a global slowdown as 60% of its consumption comes from industrial usage.
"We are in a new trading range," says George Gero, senior vice president of RBC Capital Markets, "of $1,500 support and $1,550 resistance for now as moving averages and higher closes help momentum traders." Gold might also be subject to profit taking as investors book gains where they can in a down market.
was up 0.83% at $15.85 while
was falling 0.31% to $12.81. Other gold stocks,
were trading at $64.94 and $15.57, respectively.
Written by Alix Steel in
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