Several factors are influencing the gold market and stirring debate between the bear and bull camps including the euro-gold trade, China's stance toward gold reserves, Central Bank buying (and now selling!), and physical demand.
By Melissa Pistilli—Exclusive to Gold Investing NewsNear the end of last week, gold, along with most US equities and other commodities, took a hit from poor economic data: The Institute for Supply Management index dropped 3.5 percentage points to 56.2 percent in June, its lowest level since December; the US Labor Department reported that the number of first-time unemployment benefit claims jumped unexpectedly by 13,000 in one week to 472,000; and The National Association of Realtors reported new sales contracts on existing homes fell 30 percent in May. China reported some not so welcome economic data showing growth in manufacturing activity slowed in June. Gold dropped 3.2 percent July 1, its biggest one-day drop in five months, despite the poor economic reports that generally would support safe haven gold. This week, gold prices have fought to stay above the $1200 level, falling to a six-week low Wednesday near $1185 an ounce after an equities rally killed demand for precious metals. However, prices reversed course later in the day on fresh bargain buying to close at $1203.20 an ounce. Thursday in New York, gold futures began falling as a more optimistic economic outlook started to take over the markets, decreasing the demand for safe haven assets like precious metals. Instead, investors turned their sights on equities and oil after the US Labor Department and top US retail chains released reports that helped boost confidence in economic recovery. Gold prices cut as low as $1186.50 an ounce before reversing coarse mid-day to close at $1199.50 an ounce on the COMEX. Several factors are influencing the gold market and stirring debate between the bear and bull camps including the euro-gold trade, China's stance toward gold reserves, Central Bank buying (and now selling!), and physical demand.