Morning Gold: Gold Increases 4 Straight Days, SPDR Rose

Gold and dollar

(Reuters) – On Monday, gold rose to its highest in nearly two weeks, decreasing the dollar’s strength, where U.S. economic data showed a stiff growth and the world’s biggest gold exchange-traded fund (ETF) showed the first inflow within two months.

SPDR Gold Trust, and the world’s biggest gold exchange-traded fund (ETF), holdings increased by 0.2% to reach 911.13 tons on Friday – the first rise since June 10. The fund has recorded more than 14 million ounces of outflows this year, around $19 billion at current prices.

Spot gold was up by 1.5%% to reach $1,333.31 an ounce earlier in the session, its highest since July 31. It was trading up by 1% at $1,327.50 by 0951 GMT, on the road of its four straight days of gains.

December U.S. gold futures increased $14.70 to reach $1,326.70 an ounce.

The London A.M. fix is $1,325.75.

Saxo Bank senior manager Ole Hansen said “The move above $1,300 last week has raised the risk of some additional short-covering, but the technical picture is quite neutral and it could only improve if we see gains pushing prices above the $1,350 level,” he added “It is interesting to see some strength at a time when we are also seeing a stronger dollar, which is a wake-up call to those looking for much lower prices that there is going to be a bit of a fight,”

The dollar increased 0.3% in contradiction other major currencies, rising from its hit of seven-week low on Thursday.

Usually a stronger dollar makes assets more expensive for holders of other currencies. Gold has as well been enhanced by data displaying U.S. wholesale inventories dropped suddenly for a second straight month in June, encouraging economists to lean second-quarter growth estimates and increasing assumption that the Federal Reserve could hold its commodity-friendly stimulus measures for longer.

On Friday, reported by the U.S. Commodity Futures Trading Commission, money managers and hedge funds cut gold net longs and considerably scaled down their short positioning to the lowest level since May.

Barclays Capital noted “Changes in the market perception with respect to Fed tapering or weaker than expected data, could trigger a re-establishment of the record gross shorts, exacerbating the downside for gold prices,”

On Monday, China Gold Association said, Chinese gold consumption increased to reach 706.36 tons in the first half of the year, compared with 832.18 tons in the whole of 2012.