Capital Gold Group Report: U.S. Economic Concerns, Bullish Technical Charts Support Gold Prices
17 June 2010, 11:21 a.m.
By Debbie Carlson
Chicago -- (Kitco News) --Worries about the pace of growth in the U.S. and bullish technical charts are lifting gold prices in U.S. morning trade, as investors return to the yellow metal as a safe-haven.
U.S. government data outlining first time claims for unemployment and manufacturing data suggest only sluggish growth there and another economic watchdog warns of torpor on “both sides of the Atlantic.’
Further, gold on the Comex division of the New York Mercantile Exchange is holding near the previous high around $1,250 an ounce, enticing technical-chart traders.
At 11 a.m. EST, August Comex gold was up $17.50 an ounce to $1,248. Spot gold is up $16.20 an ounce to $1,246.60. Other precious metals are seeing gains, too. Spot Silver is up $0.30 an ounce to $18.77, Spot Palladium is up $3.00 an ounce to $475.00 and Spot Platinum is up $2.00 an ounce to $1,569.00.
U.S. jobless claims rose by 12,000 last week to a seasonally adjusted 472,000, the Labor Department said Thursday and the previous week’s claims were upwardly revised by 4,000 to 460,000. The rise in jobless claims underscores the weakness in the labor market there. The pace of layoffs has slowed, but job creation has not been strong enough to pull down the unemployment rate.
‘We really haven’t made any progress on jobless claims, no matter how you look at it,” said George Gero, vice president of RBC Capital Market Global Futures.
Separately, U.S. inflation data from the Labor Department shows generally inflation remains under control. The consumer price index for May fell a seasonally adjusted 0.2% as gasoline prices dropped. Overall energy prices fell 2.9%. The core CPI, which removes the volatile food and energy sectors, rose 0.1%, only the second monthly rise in 2010.
Analysts had expected the CPI data to be tame, particularly as crude oil prices dropped sharply. The Labor Department said over the last 12 months, the index increased 2.0% before seasonal adjustment and the core is up 0.9%.
Although Thursday’s data shows no signs of inflation, Gero said gold benefits from worries down the road that the stimulus plans in Europe and the U.S. could eventually lead to inflation.
The Conference Board’s leading economic indicators index rose 0.4% in May, less than expected, following no growth in April. "The index points to continued, though slower, U.S. growth for the rest of this year. Public debt and deficits weigh heavily on growth prospects on both sides of the Atlantic," said Bart van Ark, chief economist of the Conference Board.
Lastly, the Federal Reserve Bank of Philadelphia manufacturing index showed some growth, but was not as robust as anticipated.
Gero said gold acts like it wants to take out the $1,250 area, noting that this time gold is holding its ground, unlike the past three times when it has rallied, then failed to hold that area. He specifically points to how December Comex gold has rested above $1,250 Thursday, although August is just below it.
He also said short covering and new fund buying is keeping gold supported.
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