Gold Gains Limited By U.S. Data

Gold kept on gaining and ended its second month of decline as lower prices lured investors, among which many central banks. On the Comex division of the New York Mercantile Exchange gold futures for August delivery were up 0,5% on the day and traded at $1 386,55.

Russia and Kazakhstan have been diversifying assets by buying gold after its prices contracted by a record pace. The two countries have kept buying gold for a seventh straight month. Turkey is also on the list of countries, which have expanded their gold reserves. Turkey’s holdings increased by 18,2 tons to 427,1 tons in April, a tenth straight month rise. Belarus’s holdings increased for a seventh month and Azerbaijan’s and Greece’s reserved gained for a fourth month in a row. This increased interest, based on lowered prices, has kept supporting the precious metal.

Xiang Nan, an analyst at CITIC Securities Futures Co., said for Bloomberg: “There are some people still willing to pick up the metal when prices come off. This stalemate between the bulls and bears is expected to continue for a while.”

Gold prices were pressured on Tuesday by the positive U.S. economic data. The S&P/Case-Shiller Composite-20 Home Price Index rose to 10.87% in March, compared to the revised value of 9,32% in the preceding month and way above the 10.2% forecast. The Conference Board’s Consumer Confidence Index (CCI) rose unexpectedly to 76,2 for May, compared to a revised 69 for April and exceeded the forecast of a value of 71. Good news about the U.S. economy boost speculations about scaling down Feds Quantitative Easing program later this year, thus strengthening the dollar, which would cause the precious metal to sink.

Consumer confidence is a critical factor for the U.S economy as consumers account for around 70% of GDP. The U.S. is the biggest oil consumer in the world and accounts for 22% of global oil consumption, which means that every shift in U.S. economy sentiment would cause oil prices to fluctuate up and down.