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Gold falls 0.5% after rallying on sluggish data

Last Updated: Wednesday, August 31, 2011 - 09:55

Singapore: Spot gold fell half a percent on Wednesday, pulling back from a rally of 2.6 percent in the previous session as disappointing US consumer data and poor economic sentiment in the euro zone buoyed safe-haven interest in bullion.


* Spot gold declined half a percent to USD 1,828.99 an ounce by 0020 GMT. US gold edged up 0.1 percent to USD 1,831.70 an ounce.

* US consumer confidence plunged in August to its lowest since the 2007-2009 recession, after a bruising battle over the US budget slammed stock prices and pushed the nation to the brink of default.

* Expectations that the US Federal Reserve may launch more stimulus for the faltering economy also support the sentiment in the gold market, as investors await a Fed meeting in September.

* The euro zone's economic sentiment fell more than expected in August, just as Italy warned weak growth may endanger government plans to cut debt as a lukewarm bond auction threatened to drag the bloc's third-biggest economy back to the centre of the debt crisis.

* Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, edged up on the day to 1,232.314 tonnes by Aug. 30.

Market news

* US stocks rose for a third straight day on Tuesday in a volatile session, after minutes from the latest Federal Reserve meeting boosted expectations the US central bank will act again to stimulate the economy.

* Renewed concerns about the euro zone sovereign debt crisis weighed on the euro in Asia on Wednesday, while the dollar also struggled after minutes of the US Federal Reserve's Aug. 9 meeting bolstered expectations for more stimulus.

Bureau Report

First Published: Wednesday, August 31, 2011 - 09:55
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