Gold Advances as German Orders Seen Denting Economic Optimism

Jul 04, 2014 4:10 pm ET

July 4 (Bloomberg) -- Gold rose in London, heading for the longest streak of weekly gains since March, after German factory orders fell more than expected. Palladium traded near the highest price since 2001.

Factory orders fell 1.7 percent in May, the Economy Ministry in Berlin said today. That’s more than the 1.1 percent decline forecast in a Bloomberg survey. Gold futures fell as much as 1.6 percent yesterday as investors assessed the outlook for higher U.S. borrowing costs after employment data beat estimates. China’s manufacturing expanded in June at the fastest pace this year, data showed.

“Yesterday we saw the market had a bearish tinge on the better macro data coming out of the U.S. and China, so the German May orders data modestly dented some of that macro optimism,” David Wilson, an analyst at Citigroup Inc. in London, said by e-mail.

Bullion for immediate delivery rose less than 0.1 percent to $1,319.94 an ounce by 9:07 p.m. in London from $1,319.53 yesterday, when prices dropped 0.6 percent, according to Bloomberg generic pricing. The metal rose to $1,332.33 on July 1, the highest since March 24. It’s set to rise for a fifth week, the longest streak since March 14.

Gold for August delivery rose 0.1 percent to $1,321.30 an ounce on the Comex in New York on volumes that were 79 percent lower than 100-day average for this time of day. Markets in the U.S. are closed for the Independence Day holiday.

The Bloomberg Dollar Spot Index strengthened the most in more than a month yesterday after data showed that U.S. employers added 288,000 workers to nonfarm payrolls in June, pushing down the jobless rate to 6.1 percent, a level the Fed didn’t expect before the end of the year. The European Central Bank left interest rates unchanged yesterday and unveiled details of a lending program aimed at boosting credit supply.

Gold Resilience

“Gold seems to have found some resilience over the past few weeks and the fact that it managed to shrug off the potential bearish news yesterday from the U.S. job report has lent some support,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail.

Palladium for September delivery rose 0.4 percent to $865.10 an ounce, heading for a third straight week of gains. The metal climbed for a ninth day yesterday to $867.45, the highest price since February 2001.

Silver for September delivery rose 0.3 percent to $21.20 an ounce. The metal, which is traded as a store of value and also used in industry, is on course for a fifth weekly advance that’s the longest run since August.

Platinum for October delivery fell 0.3 percent to $1,502.70 an ounce, still set for a third weekly increase.

--With assistance from Phoebe Sedgman in Melbourne, Glenys Sim in Singapore and Agnieszka Troszkiewicz in London.