Gold Futures Rise to Three-Week High as Europe Concerns Mount

New York (Jan 6)  Gold futures advanced to the highest in three weeks as concerns on Europe’s economy mounted, spurring demand for haven assets.

A gauge of euro-area services and manufacturing signaled growth slowed in the final quarter of 2014, and the euro extended losses versus the dollar amid Greek opposition to austerity measures that may prompt the country’s exit from the currency bloc. Money managers raised bullish wagers on gold for the first time in three weeks, U.S. government data showed.

Bullion prices have rallied almost 7 percent since falling to a four-year low in November on political turmoil in Greece and speculation that governments from Europe to China will bolster economic stimulus. The U.S. Mint sold 42,000 ounces of gold coins so far this month, compared with 18,000 ounces in all of December.

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“Europe’s woes are bringing in some investors to gold,” James Cordier, founder of in Tampa, Florida, said in a telephone interview. “We will probably see more people move into gold as a risk-off trade.”

Gold futures for February delivery climbed 0.3 percent to $1,208.10 an ounce at 11:08 a.m. on the Comex in New York. Earlier, prices rose to $1,214.40, the highest for a most-active contract since Dec. 16. The metal headed for a third straight increase, the longest rally since Dec. 19.

In Demand

“The precious metal is in demand as traders want to hedge their position against Greek-exit uncertainty,” Naeem Aslam, chief market analyst at Ava Capital Markets Ltd. in Dublin, said by e-mail today. While the chances of Greece leaving the euro zone are “very slim,” investors “do not want to put themselves under a situation where they are not hedged,” he said

In 2014, gold posted a consecutive annual decline for the first time since 1998 as oil prices slumped and inflation remained muted amid bets that the Federal Reserve will raise U.S. interest rates.

The Fed won’t raise rates until late this year “if at all” as declining oil prices and a stronger dollar limit room to increase borrowing costs, Bill Gross, the former manager of the world’s largest bond fund, said yesterday in an outlook published on the website of Janus Capital Group Inc.

Silver futures for March delivery advanced 0.3 percent to $16.265 an ounce on the Comex.

Source: Bloomberg