Gold Rises for Fourth Day as Weak Data, Virus Boost Haven Demand

(Bloomberg) -- Gold rose for a fourth day as investors turned to the haven asset amid concerns over the delta coronavirus variant and weaker economic data.

A gauge of New York state manufacturing moderated in August after expanding at an unprecedented pace a month earlier, while a measure of selling prices advanced to a fresh record. Chinese retail sales and industrial output data showed activity slowed due to fresh lockdowns to contain the Covid-19 outbreak there.

The data underscored broader concerns over threats to the global recovery from rising prices and virus cases, boosting bullion as a haven asset. Treasury yields and inflation-adjusted real yields also fell, increasing the metal’s appeal.

“The drop in yields and risk appetite” is helping gold, said Bart Melek, head of commodity strategy at TD Securities. The precious metal’s rebound toward $1,780 also helped trigger some investors to buy back their bearish positions, further lifting prices, according to Melek.

This week, investors will parse through a speech by Federal Reserve Chair Jerome Powell, as well as minutes of the Fed’s latest meeting, for more clues about the likely timeline for tapering. Figures for U.S. retail sales are due Tuesday.

Spot gold traded 0.4% higher at $1,787.40 at 1:34 p.m. in New York, after rising 1.5% on Friday. Bullion futures for December delivery rose 0.7% to settle at $1,789.80 on the Comex. The Bloomberg Dollar Spot Index rose 0.1%, after a 0.5% drop in the previous session. Silver rose, while platinum and palladium declined.

• “The message must be: if you have a tactical position, get out; if you have a strategic position, hedge it,” said Dominic Schnider, head of commodities and Asia Pacific foreign exchange at UBS Global Wealth Management CIO Office. “In a world that looks better, why would you want to hold so much insurance asset, and that simply means the market needs to balance at the lower level.”
  • Prices could drop closer to $1,600 an ounce, while silver may fall to $22 an ounce or lower, Schnider said in a Bloomberg TV interview on Monday. Platinum may be a better investment in the precious metals space due to its greater industrial exposure, he added.
• Goldman Sachs analysts including Sabine Schels and Daniel Sharp forecast that gold prices will hit $2,000 toward the end of the year as consumer and central-bank purchasing pick up. They’re sticking with a $30-an-ounce price target for silver.

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