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Gold hovers below record high on U.S. growth concerns

Published 08/04/2011, 03:30 AM
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Investing.com – Gold futures were up for a third day on Thursday, trading close to the previous session’s record high as growing fears over the pace of the U.S. economic outlook fuelled speculation of further stimulus from the Federal Reserve. 

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,667.25 a troy ounce during late Asian trade, edging 0.14% higher.

It earlier rose as much as 0.3% to trade at a daily high of USD1,670.35 a troy ounce, hovering below the record high of USD1,674.15 a troy ounce it hit on Wednesday.

Data on Wednesday showed that activity in the U.S. services sector declined unexpectedly in July, falling to the lowest level since February 2010, while new factory orders also fell in June.

The reports followed disappointing figures on U.S. consumer spending and manufacturing activity earlier in the week, adding to concerns over the U.S. economic recovery.

In an interview with the Wall Street Journal on Wednesday, three former top Fed officials said that the central bank should give “very serious consideration” to a new round of bond purchases if inflation slowed from recent elevated levels and if the economy continued to underperform.

Gold prices found further support after data from the International Monetary Fund showed that Thailand’s central bank purchased nearly 18.66 tonnes of gold in June, taking its total holdings of the precious metal to 127.52 tonnes.

The IMF's international finance statistics showed Russia, Kazakhstan, Greece, Ukraine and Tajikistan also added to their gold reserves from two months ago.

The news comes after Korea’s central bank said on Tuesday that it purchased 25 tonnes of gold between June and July for the first time in over a decade, reflecting the trend among central banks to diversify their foreign reserves and increase gold holdings.

Elsewhere on the Comex, silver for September delivery eased up 0.05% to trade close to a three-month high at USD41.80 a troy ounce, while copper for September delivery shed 0.1% to trade at USD4.335 a pound.

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