Gold Up on Flagging Global Recovery

2010-AUG-20

From the GoldMoney News Desk --

Gold has been steady above $1,220/oz for most of this week as concerns over stalling global recovery supported the metal. On Monday Japan released much lower than expected growth figures, boosting gold to a 6 week high. The Japanese economy expanded only 0.1% in the last quarter to June, fueling worries over the global economic recovery.

Gold consolidated comfortably after the Japanese figures on Monday afternoon, and many analysts see this as a pause before a move higher in the historically positive season for gold. Afshin Nabavi, head of trading at MKS Finance told Reuters: "Gold may be trading range-bound until the end of August and then the fourth quarter should be interesting for gold, we may see the old highs again."

Later on in the week the U.S. released unemployment data showing claims for unemployment benefits hit a 9-month high, pushing gold to its highest level since 1st July at, $1,237.15.

Ong Yi Ling, an investment analyst from Philip futures in Singapore told Reuters: "I am also looking at gold to be supported above the $1,200 level. It would be underpinned by strong investment demand as we see from the rise in holdings of the SPDR gold trust. I think it really demonstrates a strong investment interest in gold that will continue, especially if we see people worried about the economic recovery. It really depends on the kind of economic data that is being printed."

Silver was more volatile this week as the conflicting push and pull of factors struggled against one another. At the start of the week silver followed gold's lead up to a high of $18.63/oz on Tuesday. However on Wednesday silver fell back to $18.13 before picking up again into Friday at $18.30. Silver seems to be having a difficult time finding a comfortable level this week. The very factors that are boosting gold, as far as silver is concerned, are a double-edged sword as the main use for silver is still industrial.

Platinum suffered from the same problem as silver this week and had a trading range of $1,515/oz and $1,544 on Wednesday alone. Early on Friday Platinum fell further to around $1,510.

Palladium was slightly more stable this week although it did fall at the end of the week to under $480/oz after hitting $495 earlier in the week.

All data and quotes sourced from Reuters.