Gold price surges, poor US data fuels move towards $1,300/oz

Otmane El Rhazi from The Bullion Desk.

The gold price surged on Tuesday afternoon when disappointing US durable goods orders sparked a near-$20 move towards $1,300.

Spot gold was last at $1,295.00/1,295.80 per ounce, up $15.50 for the day and just below its intraday high of $1,297.70. It had bottomed out at $1,272.20 earlier.

Silver followed gold higher – it was last 22 cents higher at $18.10/18.15 per ounce after reaching an intraday high of $18.21. Platinum also recorded strong gains, rising $17 to $1,264/1,269 while palladium climbed $4 at $778/783.

After core US durable goods data significantly undershot the 0.6-percent forecast at -0.8 percent and durable goods orders at -3.4 percent also fell short of expectations, the euro sprung to an intraday high of 1.1422 from close to 11-year lows.

“Gold prices pulled back in recent days after the safe-haven buying activity ahead of the ECB QE decision and the Greek election but the pullback was just consolidation – the fact it is now rebounding again is constructive,” FastMarkets analyst William Adams said.

“The rebound seems to be driven by dollar weakness following the poor US durable goods orders,” he added.

Markets are watching data closely ahead of the US Federal Open Market Committee meeting on Wednesday where the US central bank is expected to take account of the uncertain global outlook and maintain its commitment to be patient on tightening. But its plan remains to increase interest rates perhaps by the middle of the year, which is dollar-positive.

“The FOMC’s upcoming deliberations over the timing of policy normalization will take place against a backdrop of falling inflation. Without a strong set of conditions that convincingly point to higher inflation in the near term, the committee is likely to pursue a cautious path and keep policy rates unchanged,” HSBC’s James Steel said.

In other data today, the US CB consumer confidence at 102.9 easily beat the forecast 95.3, as did new home sales at 481,000. Its flash services PMI at 54.0 was broadly in line with expectations, as was the Richmond manufacturing index at 6 and the S&P/CS composite-20 HPI at 4.3 percent.

(Editing by Mark Shaw)

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