Gold News

Gold whipped by US data; records fourth-best month ever in May

Spot gold prices continued recovering in early US trade Thursday, topping $661 for the first time since Monday.

Gold priced in Dollars then pulled back as the US currency rebounded on the currency exchanges.

Gold in British Pounds broke above £334 per ounce. For Eurozone investors wanting to buy gold today, it touched a one-week high of €491.

These spikes in the gold price came on the weakest US growth data in four years.

The Commerce Dept. had already revised first-quarter economic growth down from 1.8% to 1.3%.

Today it put the final estimate at just 0.6%. Wall Street analysts had forecast 0.8% on average.

The Dollar fell one-fifth of a cent versus the European single currency to $1.3476 per Euro on the GDP data.

Gold added $2 to $661 after rising from an overnight low of $653 just ahead of the Asian opening.

But "this report is really in the rear-view mirror," as Michael Woolfolk, senior currency strategist at Bank of New York, said to Bloomberg – and the Euro's rise was reversed as data from May showed US industrial orders rising a massive 16% from April.

The Chicago Purchasing Managers Index also showed prices paid by US industry rising 8% during the last month – a sign of rising inflation that the US Fed tried to discount at its last policy meeting.

"It does seem clear from yesterday's Fed minutes that the Fed is downgrading its outlook for the economy," says Woolfolk, "which is not seen returning to trend growth until 2008.

"We could see some further Dollar weakness."

By 09:45 in New York, the spot gold market had pulled back below $660 per ounce.

But by hitting $659.10 at the Afternoon Fix in London, physical gold bullion closed May with its third highest monthly average ever – beaten only by April this year, May 2006, and the all-time record top of Jan. 1980.

Short-term noise and setbacks aside, in other words, the six-year bull market in gold starting in 2001 rolls on.

If you'd like to join the long-term bull market in gold today - starting with a complimentary gram of investment-grade gold stored in Zurich - click through to now...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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