Feb. 21 (Bloomberg) -- Gold rose in New York for the first time in three days as slumping U.S. home sales revived concern that the economy is weaker than forecast, spurring demand for the metal as a haven asset.
American sales of previously owned homes dropped in January to the lowest in more than a year, the National Association of Realtors said today. Gold, after slumping last year by the most since 1981, has rallied 10 percent in 2014 as signs that the U.S. economy wasn’t recovering in line with expectations renewed the metal’s appeal for investors.
“Gold continues to get some support from weaker U.S. data,” Bart Melek, an analyst at TD Securities in Toronto, said in a telephone interview. Price gains will be capped amid signs that the Federal Reserve will probably press on with stimulus cuts, he said.
Gold futures for April delivery added 0.5 percent to settle at $1,323.60 an ounce at 1:37 p.m. on the Comex in New York. On Feb. 18, the metal climbed to $1,332.40, the highest for a most active contract since Oct. 31. Prices gained 0.4 percent this week, a third straight increase.
Bullion fell in the previous two sessions amid concern that continued stimulus cuts from the Fed will sap demand for the metal as an inflation hedge. Minutes from the central bank’s January meeting released this week signaled policy makers support continued decreases after cutting monthly bond purchases to $65 billion from $85 billion.
“Prices have largely remained rangebound after rising above $1,320, since it still looks like the Fed will continue to shrink the stimulus,” Melek said.
Gold rose 70 percent from December 2008 to June 2011 as the central bank pumped more than $2 trillion into the financial system. Bullion plunged 28 percent in 2013 amid muted inflation and a rally in equities.
Some analysts are split on the outlook for prices. Gold has lost its luster and will decline to $1,011 in December as the Fed tapers and the dollar strengthens, Westpac Banking Corp. said yesterday in a report. Goldman Sachs Group Inc. last week affirmed a forecast for $1,050 by the end of the year. UBS AG said Feb. 19 that the metal has “started to shed its stigma,” and increased its 2014 forecast to $1,300 from $1,200.
Assets in SPDR Gold Trust, the biggest fund backed by the metal, are heading for the first monthly inflow since December 2012, according to David Mazza, the head of ETF research at State Street Bank & Trust Co., the marketing agent for the fund.
Silver futures for delivery in May gained 0.5 percent to $21.815 an ounce, extending the week’s advance to 1.8 percent.
Palladium futures for delivery in March added 0.5 percent to $740 an ounce on the New York Mercantile Exchange. Trading was almost double the average in the past 100 days, data compiled by Bloomberg show.
Platinum futures for April delivery gained 1.1 percent to $1,427.90 an ounce amid concern that an ongoing strike will crimp output from South Africa, the biggest producer.
--With assistance from Nicholas Larkin in London and Phoebe Sedgman in Melbourne. Editors: Millie Munshi, Joe Richter