“Anytime there’s fluctuations in currencies, people still see gold as a safe-haven investment”, Michael Smith, the president of T&K Futures and Options Inc.in Port St. Lucie, Florida, said in a telephone interview.
Advertisement
The euro trended lower against the dollar at $1.1142 on Thursday, as compared to its previous close of $1.1160 in North American trade late Wednesday.
Even with nearly all major currencies losing ground against the dollar this year amid rising expectations for increased borrowing costs in the U.S., China had maintained a de facto peg since March amid a push for the yuan to win reserve status at the worldwide Monetary Fund.
Following the biggest monthly drop in two years, gold has risen nearly every day in August.
U.S. exporters are already in danger of being priced out of their markets, given relative dollar strength.
In economic news, U.S. retail sales in July rose in line with estimates, a Commerce Department report revealed Thursday, while business inventories increased much more than expected in June. This was better than expected and put pressure on gold.
Gold on Tuesday climbed to a three-week high as China’s devaluation of the yuan spurred concern that other countries may intervene in the currency market. S. dollars, or 0.26 percent, to settle at 1,112.70 dollars per ounce.
“The gold price is the sum of all fears, and we’re seeing a reflection of nervousness in the market following the yuan devaluation”, Ross Norman, chief executive officer of Sharps Pixley, a London-based metal dealer, said by phone.
Gold has benefited the most from the situation in China because the metal looks set continue building on the strongest rally in months. The metal, which was neglected during the Greek debt crisis and has been languishing near a five-year low, rebounded to a three-week high Friday, before trading little changed.
Bullion holdings at the giant SPDR Gold Trust (NYSEArca:GLD) yesterday saw the first inflow – needed to back the number of shares in issue – since mid-July, taking the total to 671 tonnes, a fresh 7-year low when first reached last week.
Currency traders are closely eyeing US data the rest of the week, especially Thursday’s report on US retail sales for July.
“We are still looking for a rate hike this year despite all that’s happened”, said Gan. The weaker yuan would make it more expensive for China, the world’s top consumer, to import gold, said OCBC Bank analyst Barnabas Gan.
U.S. gold for December delivery rose 0.5 per cent to $1,109.10 an ounce.
Advertisement
Spot platinum fell 0.4 per cent to $980.49 an ounce and palladium gained 0.3 per cent to $609.22.
