Gold prices hold firm on mixed economic data from the US

Bengaluru — Gold prices were little changed during a choppy session on Thursday as investors took stock of mixed economic data from the US, with strong US retail sales offering temporary respite to battered risk appetite.

However, lingering fears over a global downturn and lack of clarity on the US-China trade front kept the safe haven comfortably above the key $1,500 handle.

Spot gold was flat at $1,516.62 an ounce by 2.21om GMT, while US gold futures were unchanged at $1,527.20.

At the day’s peak of $1,523.91, gold was back to within $11 of Tuesday’s six-year high, which was followed by a 1% jump on Wednesday, due to fears of a recession as investors fretted over the trade war, unrest in Hong Kong, and a slide in emerging-market assets.

“But with the US retail sales data coming out as strong as it did, that’s seeing some market participants rethink their bets,” said Daniel Ghali, commodity strategist at TD Securities. However, the elevated levels of safe-haven interest in gold fulled by factors such as the Hong Kong unrest and fears of an Argentine debt default “is not likely to change in a single day”, he added.

US stocks opened higher and treasury yields rose, driven by a surge in July retail sales which soothed some nerves frayed by an inversion in the government bond yield curve, often a signal of a recession. 

On the flip side, US manufacturing output ended a two-month run of growth in July, while initial weekly jobless claims data was weaker than expected.

Considered a safe store of value during times of political and economic uncertainty, gold has gained more than $100 since the beginning of the month.

“Although gold prices look like they are overshooting, it has not been a good idea in the past to bet that the runaway train is going to come to a halt,” TD Securities’ Ghali said.

Investors digested conflicting signals on the trade front as well.

China’s finance ministry initially said it would take counter-measures against the latest tariffs on Chinese goods, but this was followed by a separate statement that Beijing hoped the US would meet China halfway for a consensus.

“The overall uncertainty from the trade dispute is high and we also expect some central bank action for recession-fighting to come over the next weeks and months,” said Norbert Rücker, head of economics and next-generation research at Julius Bär.

In other metals, silver was flat at $17.20 an ounce. Platinum was down 0.1% to $839.67 an ounce and palladium rose 1.3% higher at $1,442.04.

Reuters