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25 Feb 2014
Gold breaks to fresh multi-week highs on US growth concerns
FXStreet (London) - Gold has broken to a fresh 16-week high on ongoing concerns over the pace of the US economic recovery.
Prices had been subdued earlier on in the session after yesterday's gains. However below-consensus US data helped to give to precious metal some bullish momentum.
Weakening US confidence
US consumer confidence fell to 78.1 in February, down from 79.4 in January, according to the index published by the Conference Board. In addition, home prices showed a deceleration in the year to December, further indicating weaker US consumer confidence.
Today's gains bring gold price rises up to 11 percent so far this year. The rally follows a 28 percent decline in 2013, the largest fall since 1982.
Gold demand increases despite Fed tapering
Gold has rallied strongly despite the US Federal Reserve's commitment to taping its asset purchase programme. The Fed has so far cut around USD20bn from its quantitative easing purchases, bringing them down to USD65bn. While the Fed is only in a relative tightening phase, the contraction in US liquidity injections has ramped up emerging market volatility as borrowing costs increase for those countries with high levels of dollar-denominated debts.
While geopolitical concerns, such as the recent turbulence in the Ukraine have added to haven demand for gold, the main brunt of dollar demand comes from those concerned over US economic data as well as the tightening of Chinese conditions increasing gold's draw as a store of value.
Spot gold is currently trading at USD1,341.89/oz, gaining 0.37 percent on the session so far.
Prices had been subdued earlier on in the session after yesterday's gains. However below-consensus US data helped to give to precious metal some bullish momentum.
Weakening US confidence
US consumer confidence fell to 78.1 in February, down from 79.4 in January, according to the index published by the Conference Board. In addition, home prices showed a deceleration in the year to December, further indicating weaker US consumer confidence.
Today's gains bring gold price rises up to 11 percent so far this year. The rally follows a 28 percent decline in 2013, the largest fall since 1982.
Gold demand increases despite Fed tapering
Gold has rallied strongly despite the US Federal Reserve's commitment to taping its asset purchase programme. The Fed has so far cut around USD20bn from its quantitative easing purchases, bringing them down to USD65bn. While the Fed is only in a relative tightening phase, the contraction in US liquidity injections has ramped up emerging market volatility as borrowing costs increase for those countries with high levels of dollar-denominated debts.
While geopolitical concerns, such as the recent turbulence in the Ukraine have added to haven demand for gold, the main brunt of dollar demand comes from those concerned over US economic data as well as the tightening of Chinese conditions increasing gold's draw as a store of value.
Spot gold is currently trading at USD1,341.89/oz, gaining 0.37 percent on the session so far.