Gold recovers, silver hits Jan 2015 high

Gold futures edged high Wednesday morning in the US with investor concerns over global growth offsetting the recovery in international equities.

Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $5.60 or 0.4 percent to $1,323.50 per ounce. Trade has ranged from $1,313.30 to $1,327.00.

Equities – particularly in Europe – have rebounded in recent days after hitting multi-year lows following the UK referendum 

Still, gold is well-positioned due to the ongoing uncertainty facing the global economy. And investors aren’t expecting another Federal Reserve rate increase until 2017 since chairwoman Janet Yellen warned that the Brexit vote could impact the fragile American recovery.

“Gold remains well bid shrugging off the rebound in global equity markets yesterday and overnight,” Peter Hug, Kitco Metals Global Trading Director, said. “Taking Brexit off the table, it remains apparent that central banks will continue to create massive liquidity in their losing battle to create growth. The Fed is frozen and is as likely to lower rates rather than raise.”

European Central Bank president Mario Draghi said Tuesday that the Brexit decision could reduce EU growth by 0.3 to 0.5 percent over the next three years compared to previous estimates.

Draghi urged the heads of states for increased coordination to fight fears that the European Union was facing an existential crisis and to address vulnerabilities in the banking sector.

The 27 EU member states of the EU, excluding Britain, are expected to hold a meeting on Wednesday morning to discuss the Brexit but they will also focus on ideas on how to change the European Union.

In paper holdings, gold inflows into exchange-traded-funds tracked by FastMarkets continued overnight with a 5.23 tonne increase, which brings the total amount to 2,002 tonnes – the highest since July 17, 2013.

With prices consolidating around $1,325 per ounce due to to stabilisation in the financial markets, the persistent inflows show investors are still attracted to gold’s safe-haven characteristics.

In data, US personal spending month-over-month in May was in-line with expectations at 0.4 percent, while personal income over the same period disappointed at a 0.2 percent gain, below the forecast of 0.3 percent. CORE PCE price index month-over-over in May came in at the economic consensus of a 0.2 percent increase.

Later, crude oil inventories and the results of bank stress test are slated for release.

Turning to international markets, Germany’s DAX and France’s CAC-40 were up 1.5 percent and 2.3 percent respectively, while the dollar softened 0.3 percent to $1.1093 against the euro.

As for other precious metals, Comex silver for July settlement jumped 52.2 cents or 2.9 percent to $18.365 per ounce. Earlier, the price hit $18.395, the highest since January 25, 2015.

“Silver is outperforming gold as risk-appetite resumed; silver, as an industrial metal, tends to perform better on a relative basis,” FastMarkets analyst Boris Mikanikrezai said.

Platinum for July delivery rose $17.50 or 1.8 percent to $996.40 per ounce while the most-actively traded palladium contract stood at $575.30 per ounce, up $5.35 or 0.9 percent.

(Editing by Tom Jennemann)

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Source: Bullion Desk News

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