Gold Price Gains on Worries Over U.S. New Home Inventories Glut
The gold price reached its highest level in less than two weeks after U.S. data showing an increase in new home inventories fed investor concerns about the health of the world’s largest economy.
April gold added 1.4% to finish at $1,239.10 an ounce, the highest settlement since February 12. Prices reached an intraday high of $1,254.30 immediately following the release of the U.S. report.
Sales of new homes plunged 9.2% to 494,000 and the median price inched down last month, the Commerce Department said. The report cast doubt whether demand is as firm as previously thought.
“The gold price is rising because investors are scared,” said Moe Zulfiqar, a research analyst at Lombardi Financial, adding that he sees the gold price to hit $1,300 in near term.
A steep rout in global stocks and crude prices over the past few days helped further lift the precious metal and its peers. All three major U.S. indexes declined more than 1% when markets opened on Wednesday. In London, the FTSE 100 closed 1.6% lower, and in Paris, the CAC 40 closed down 2%.
SPDR Gold Trust (NYSEARCA:GLD), the world’s biggest gold exchange-traded fund (ETF), was up 0.7% at $118.02 at 2:32 p.m. in New York on Wednesday. It has rallied 16.3% so far this year.
Gold mining also benefited from Wednesday’s jump. Barrick Gold Corporation (NYSE:ABX), the world’s largest producer of the metal, rose 6.7% to a new 52-week high of $14.45, before erasing gains. Goldcorp Inc. (NYSE:GG) advanced 7.8% to an intraday high of $16.50.
“It could be wise for investors to start paying attention to mining companies,” Zulfiqar said. “They will be the true winners at the end.”
