Wednesday, September 2, 2009

Gold, Silver Prices Gain on U.S. Factory, Housing-Sales Data

Sept. 1 (Bloomberg) -- Gold gained after reports showed factories in the U.S. expanded in August, helping to lead the economy out of the worst recession since the 1930s, and purchases of previously occupied homes increased in July.

The Institute for Supply Management’s factory gauge rose to 52.9, topping forecasts, from 48.9 in July, the Tempe, Arizona- based group said today. The index rose above 50, which indicates expansion, for the first time in 19 months. The National Association of Realtors reported a 3.2 percent gain in an index of home-sale contracts, more than anticipated, in July.

“This morning’s positive manufacturing report is lifting the price of gold,” Ralph Preston, a Heritage West Futures Inc. analyst in San Diego, said by e-mail. If the metal closes above $960 an ounce, “that should spark trending price action” to $975 an ounce, he said.

Gold futures for December delivery gained $3, or 0.3 percent, to $956.50 an ounce on the New York Mercantile Exchange’s Comex division. The most-active contract slipped 0.2 percent in August, the second decline in the past three months.

Bullion for immediate delivery in London climbed $4.83, or 0.5 percent, to $956.08 an ounce at 8:41 p.m. local time. Spot gold slid 0.3 percent last month after rising 3 percent in July.

“If gold is set to make much further gains from current levels, either inflation, or the fear of inflation, must increase or the dollar needs to fall much further,” John Reade, UBS AG’s head metals strategist in London, said today in a note.

Dollar Strengthens

The dollar rose as much as 1.1 percent against the euro, erasing an earlier decline of as much as 0.3 percent. Data showing an August contraction by Europe’s manufacturers stoked investor concerns that the recession may linger on the continent.

Gold climbed to $955 in the London afternoon “fixing,” the price used by some mining companies to sell their output, from $949.75 in the morning fixing.

Bullion held in ETF Securities Ltd.’s exchange-traded commodities reached a record 7.989 million ounces on Aug. 28, from 7.96 million ounces the day before, according to figures on the company’s Web site. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, were unchanged for a fourth day at 1,061.83 metric tons as of yesterday.

The U.S. Mint sold 82,000 one-ounce American Eagle gold coins last month, down 4.7 percent from July, according to the mint’s Web site. Sales of one-ounce American Eagle silver coins slid 24 percent to 2.13 million last month.

Silver for December delivery gained 13.7 cents, or 0.9 percent to $15.06 an ounce in New York. The metal climbed 7.1 percent in August, the second straight monthly increase.