Gold price nears month high ahead of US inflation data
Investors are preparing for both US producer price and consumer price index numbers due this week.
The price of gold spiked as much as $44 an ounce higher in midday trade Tuesday on the back of another day of selling on equity markets and after finding support from a softer dollar and a stronger oil price.
On the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands for $1,229.50 an ounce, up $34.60 or 3% from Monday’s close.
The gold price jumped out of the starting gates on Tuesday rising to a high of $1,239.00 by 10am EST in heavy volumes of more than 20m ounces traded by noon.
Silver traders followed the gold market higher with March contracts adding over 5% to $17.11, down from a day high of $17.23 an ounce early on.
A correction on global stock markets – some say a long overdue one – after a relentless seven week rally to record highs in the US was the main factor behind gold’s strength this week.
While the drop in the Dow Jones and S&P500 indices was far from dramatic, Chinese stocks were hammered down 8% overnight on increasing worries about a slowdown in the world’s largest economy and fears of a return to crisis mode in Europe after trouble in Greece and other peripheral economies saw equity markets in the trading bloc sell off heavily.
Gold has been all over the place since Friday’s strong jobs data in the US gave another boost to the already rampant US dollar which jumped to a more than 8-year high against the currencies of its major trading partners.
Gold and the dollar usually move in opposite directions, and another retreat in the dollar index and slight improvement on oil markets on Tuesday provided additional support to the metal.
Gold’s gains since hitting four-year lows early November hit 7.5% today while silver has advanced 10.6% over the same period.
