Gold extends gains

Gold keeps gaining, following disappointing U.S. data from last week. The precious metal extended its first back-to-back weekly gain of 0.4% in four weeks as the greenback retreated and hedge funds raised bets on a gold rally the most in two months.

On the New York Mercantile Exchange, gold for August delivery traded at $1 395,35 at 7:09 GMT, up 0,17% on the day. Silver, platinum and palladium also record gains, respectively by 0.52%, 0,39% and 0,07% on the day.

Assets in the SPDR Gold Trust expanded for the first time on May 29 for the last three weeks and held positions for the following two days. According to Deutsche Bank AG, sales from the fund may largely be over. The dollar lost positions last week against its major peers following negative economic data, which dampened speculations about earlier-than-expected quantitative easing slowdown. According to the Commerce Department, consumer spending fell 0,2% after the reading for March was revised lower to show a gain of just 0,1%. The Q1 GDP reading stood at an annualized 2.4%, below both the forecast and previous period value of 2.5%. The dollar index dropped 0,3%.

Michael Cuggino, who manages about $14 billion of assets at Permanent Portfolio Family of Funds Inc. in San Francisco said for Bloomberg: “Gold continues to be useful as an insurance policy in people’s portfolios to guard against uncertainty and possibly some economic dislocation. You have a lot of monetary creation going on, and while inflation is not a current threat, that doesnt mean its not a threat at some point.”

Prices found support in previous weeks by increased central banks physical demand, lured by attractive prices. Russia and Kazakhstan have been diversifying assets by buying gold after prices contracted with 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. Gold demand in India, world’s largest buyer, will hit a quarterly record according to the World Gold Council and will reach 300 to 400 metric tons, equal to half of the total shipments last year. However, some analysts stated an opinion that demand will falter, if prices don’t drop fall back. China’s gold demand may decrease in the second half of the year.

Sun Yonggang, a macroeconomic strategist at Everbright Futures Co. said for Bloomberg: “Gold’s getting a lift from the halt in the dollar’s strength as the debate over whether the Fed will continue QE goes on. The fall back below $1,400 seems to have lured some buyers. Sales from ETFs appear to be slowing although it’s too soon to draw any conclusion from that.”