Gold prices surge above $1,200/oz as US data underwhelms

Otmane El Rhazi from The Bullion Desk.

Gold prices broke through the physiological barrier of $1,200 per ounce for the first time in two weeks as US data continues to disappoint and oil prices rise.

Gold for June delivery on the Comex division of the New York Mercantile Exchange climbed by $12.60 to $1,205 per ounce. Trade has ranged from $1,190.40 to $1,206.90.

In US data, core retail sales month-over-month in April were up 0.1 percent, off the 0.4 percent forecast, while retail sales month-over-month for April was unchanged, missing the estimates of 0.3 percent. Even more pronounced, April import prices month-over-month were down 0.3 percent, in opposite direction of the 0.3 percent increase forecast.

Light sweet crude (WTI) oil futures on the Nymex were last up 42 cents or 0.7 percent to $61.18 per barrel, the highest price of the calendar year.

“The fact that oil prices have increased earlier and more strongly than anticipated should allay the market’s fears about deflation, which should have a positive impact on the gold price just as soon as the correction on the bond markets is complete,” Commerzbank said. “Furthermore, the weaker US economic data of late make it unlikely that the Fed will raise interest rates as early as June.”

Meanwhile in the eurozone, flash GDP quarter-over-quarter rose 0.4 percent, slightly below the 0.4 percent estimate. Industrial production month-over-month in March was down 0.3 percent, while forecasters pegged a 0.1 increase.

While in Asia, Chinese new loans for April was 708 billion, below the estimates of 1.21 trillion. April M2 money supply year-over-year in April was up 10.1 percent, off the 11.9 percent forecast.

In equities, German’s DAX was down 0.2 percent, while France’s CAC-40 was up 0.7 percent. The euro was 0.9 percent stronger at $1.1319 against the dollar.

In other precious metals, Comex silver for July delivery was up five cents at $17.050 per ounce. Trade has ranged from $16.48 to $17.095.

Platinum for July delivery on the Nymex increased $12.30 to $1,145.30 per ounce while the most actively traded palladium contract was at $788.05, up $2.90.

(Editing by Tom Jennemann)

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