Gold rose 2 percent on Thursday, almost erasing the steep losses of the previous day, after the European Central Bank extended investors' gloomy view of the region, ahead of key speeches on the US economy. Federal Reserve chairman Ben Bernanke will deliver a speech on the US economic outlook at 1:30 pm EDT (1730 GMT) and President Barack Obama will address Congress at 7:00 pm (2300 GMT) on an estimated $300 billion plan to spur job creation.
Jobless claims rose in the United States last week, the Labour Department reported Thursday, adding to the anaemic picture in the labour market after zero job creation through August. That negated positive data from the Commerce Department showing a sharp drop in the country's trade deficit. Stocks on Wall Street were down slightly in volatile trade after rallying nearly 3 percent on Wednesday.
"There's zero growth in US jobs and a lot of apprehension about what Bernanke and Obama can do with their speech," said Michael Daly, precious metals analyst at PFG Best in Chicago. "The grim outlook on Europe isn't helping either, and that's why stocks are down today and gold's back to looking as a safe bet." The European Central Bank signalled that its interest rate rise cycle had been halted, saying eurozone inflation risks were no longer skewed to the upside and economic growth would be slow at best.
The ECB left interest rates unchanged at 1.50 percent, as expected. Yet the downbeat assessment of the euro region by its president, Jean-Claude Trichet, dented the euro, pushing up the price of gold in the single currency, as well as in dollars. Swiss bank UBS raised its 2012 gold price forecast to $2,075 an ounce from $1,380 and its 2011 price view to $1,665 an ounce from $1,500.
"At this point in time, there is nothing else that can act as a safe haven, said Afshin Nabavi, head of trading at MKS Finance in London. "Buy gold or just keep your cash under the mattress. Those are the only real (safe-haven) options." At 12:10 pm EDT (1610 GMT), spot gold, which tracks trades in bullion, hovered around $1,857 an ounce, up 2.2 percent from the $1,816.46 level last seen in New York on Wednesday. Bullion priced in euros was above 1,330 - some 3 percent short of record highs.
In futures, US gold for December delivery rose 2.4 percent to above $1,860 an ounce. "In the medium term to long term, it's pretty clear that the bullish trend hasn't been tarnished a bit," said Pradeep Unni, senior analyst at Richcomm Global Services. Both bullion and gold futures closed down 3 percent on Wednesday as investors sold the precious metal and bought stocks after a German court ruling that was seen aiding Berlin's participation in eurozone bailouts.
Comments
Comments are closed for this article.