Gold Rises to Two-Month High as Silver Climbs on Economic Data

Jun 24, 2014 2:19 pm ET

June 24 (Bloomberg) -- Gold rose to a two-month high as U.S. home prices rose at a slower pace than forecast and business confidence in Germany eroded, boosting the appeal of the metal as a haven. Silver climbed to the highest since March.

The S&P/Case-Shiller index of property values in 20 U.S. cities increased 10.8 percent in the 12 months that ended April 30, the smallest in more than a year, data showed today. In Germany, Europe’s largest economy, business confidence fell to the weakest this year amid signs of slower economic growth.

Gold futures have climbed 6 percent this month, partly on concerns that gains in the global economy will be muted. On June 11, the World Bank cut its growth forecast. Federal Reserve policy makers led by Chair Janet Yellen said last week that U.S. interest rates will remain low for a considerable time.

“This weaker home prices in the U.S. and this negative news out of Europe are giving gold a bump,” Fain Shaffer, the president of Infinity Trading Corp. in Indianapolis, said in a telephone interview. “We’re also still moving higher from Yellen’s statements last week.”

Gold futures for August delivery rose 0.2 percent to settle at $1,321.30 an ounce at 1:36 p.m. on the Comex in New York. Earlier, the price reached $1,326.60, the highest for a most- active contract since April 15.

The precious metal pared gains after U.S. government data showed purchases of new homes rose in May by the most in 22 years.

Futures have been trading above the 50-, 100- and 200-day moving averages since June 19, spurring technical buying, Shaffer said.

Silver Rally

Silver futures for September delivery rose 0.6 percent to $21.097 an ounce. Earlier, the price reached $21.225, the highest since March 18. This month, the metal has climbed 13 percent, heading for the biggest gain since August.

On the New York Mercantile Exchange, platinum futures for July delivery gained 1.1 percent to $1,471.90 an ounce.

In South Africa, the world’s biggest producer, a union representing 70,000 workers signed an accord with the top three companies to end a five-month strike that crippled production and spurred a first-quarter contraction in the economy.

Palladium futures for September delivery climbed 0.9 percent to $830.40 an ounce. Russia is the top source of the metal, followed by South African.

“Platinum and palladium prices remain well supported” with both markets facing “sizable” deficits in 2104, Citigroup Inc. said in a report. “We would not expect the South African mines to return to full production until September at the earliest, the timing of which could bolster price volatility next quarter.”

--With assistance from Andre Janse van Vuuren in Johannesburg.