Gold still gaining as economic doubts weaken dollar
GOLD notched up a second straight day of increases to near two-week highs yesterday, closing in on a tenth consecutive yearly gain as doubt re-emerged over the US economic outlook and weakened the dollar.
Palladium hit fresh nine-year highs, driven by expectations of robust demand next year, while silver hovered near three-week highs.
The latest American data, which showed consumer confidence unexpectedly worsening through December and a drop in prices of single-family homes in October, was at odds with other signs suggesting recovery was accelerating in the world's largest economy.
Spot gold rose 0.3pc to $1,409.85 an ounce, after hitting a two-week high of $1,406.75 on Tuesday. US gold futures for February delivery were up $5.4 an ounce at $1,411.00.
"Is gold a bubble? Perhaps, but the trend is still clearly 'from the lower left to the upper right' on the charts and in all currency varieties," said Dennis Gartman, author of the Gartman investment newsletter.
"Only the courageous or the ill-advised shall choose to 'fade' this trend and we are neither. Certainly we are not the former," he said, adding that the group had added to its long position in dollar-priced gold on Tuesday.
Gold is on track for a near 30pc gain this year, fuelled by investors seeking an alternative to increasingly volatile currencies, stocks and bonds, against a backdrop of an uncertain US outlook and Europe's debt crisis.
US Treasury prices struggled to remain in positive territory as anxiety grew over the coming $29bn sale of seven-year notes.
The dollar pared earlier gains to decline broadly, falling against the yen as the return to Japan of company earnings at the year-end outweighed higher Treasury yields.
"The US economy outlook and monetary policy is a key factor that influences gold prices. We've seen data alternate between good and bad, showing that the economy is recovering, but without a strong momentum yet," said Hou Xinqiang, an analyst at Jinrui Futures based in China.
Trading was thin over the holiday period. (Reuters)