* Weak new home sales, durable goods stir safe-haven bids
* Gold now about $20 below record high at $1,264.90
* World Gold Council sees gold demand increasing in 2010
* Coming up: US jobless claims due Thursday, GDP Friday
(Recasts, updates prices to market close, changes byline,
dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 25 (Reuters) - Gold rose for a second day on
Wednesday to an eight-week high above $1,240 an ounce, as
investors turned to bullion as a safe haven after bleak U.S.
new home sales and durable goods data stirred double-dip
recession worries.
The metal's trend has been rising since it hit a low at
$1,160 on July 18, boosted by a spate of weak economic data and
after the Federal Reserve downgraded its economic outlook.
(Graphic: http://link.reuters.com/syz27n)
Gold is about $20 below from its all-time high at $1,264.90
set on June 21.
Gold was boosted by continuing fears after data showed new
U.S. home sales slumped to the slowest pace on record in July
and orders for costly durable goods were weak, said Adam
Klopfenstein, senior market strategist at MF Global's unit
Lind-Waldock. []
"Until we get some type of conclusion of where the economy
is going, gold is going to be well supported," he said.
Silver and platinum group metals climbed on gold's
strength, and as the S&P 500 index <.SPX> ended higher,
snapping a four-day losing streak due to technical support and
bargain hunting. []
Spot gold <XAU=> was at $1,240.80 an ounce at 3:47 p.m. EDT
(1947 GMT), against $1,229.25 late in New York on Tuesday. U.S.
gold futures for December delivery <GCZ0> settled up $7.90 at
$1,241.30, while gold priced in euros and sterling also hit
multi-week highs.
Gold is benefiting from renewed investor demand for
safe-haven assets as evidence of a stalling economy recovery
mounts, which in turn has pushed global equities to their
lowest since early July, when a recovery in risk appetite led
prices to retreat from June's record highs.
"This recent leg-up and the quite significant move
yesterday post the U.S. housing data is perhaps that trend of
safe haven inflows into gold resuming," said RBS analyst Daniel
Major.
Spot bullion rallied to a high of $1,241.35 an ounce.
Industrial commodities also fell, as copper, a barometer of
economic activity, hitting its lowest in a month. []
Gold investors took heart after euro <EUR=> swung back into
positive territory against the dollar after the weak U.S. data,
having earlier come under pressure on worries about widening
peripheral sovereign bond spreads after the previous day's
downgrade of Ireland's credit rating. []
Gold's strength could be also seen when priced in non-U.S.
currencies.
Gold priced in euros <XAUEUR=R> hit its highest since July
1 at 981.61 euros an ounce against its previous close at 973.59
euros. Sterling-priced gold <XAUGBP=R> reached its highest
since mid-July at 803.91 pounds.
INVESTMENT FIRM
A report released by World Gold Council, an
industry-sponsored trade group, suggested further support for
bullion prices.
The WGC said in its quarterly demand trends report on
Wednesday that India and China were likely to provide the main
thrust to demand growth this year and predicted investment
demand would stay strong. []
WGC reported burgeoning bullion investment in the second
quarter, notably from Europe, seat of the euro zone sovereign
debt crisis. Demand for gold exchange-traded funds quintupled
in the quarter, it said.
Investment demand for gold has increased in recent
sessions, with holdings of the world's largest gold-backed
exchange-traded fund, the SPDR Gold Trust <GLD>, rising by
nearly 13 tonnes last week, its biggest one-week climb since
early June. []
Physical gold demand also tends to rise in August as
jewelers stockpile inventory ahead of the start of India's
festival season, which starts with Raksha Bandhan on Aug. 24
and extends until Dhanteras in November, the biggest
gold-buying day.
Spot silver <XAG=> rose 3 percent to $18.89 an ounce from
$18.34 on strong investment demand, extending gains after
posting its biggest one-day rise in more than three weeks on
Tuesday, echoing the climb in gold prices.
Platinum <XPT=> was at $1,523.50 an ounce against $1,510,
while palladium <XPD=> was at $491.50 against $482.50.
Prices at 4:03 p.m. EDT (2003 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1241.30 7.90 0.6% 13.2%
US silver <SIU0> 19.026 0.648 0.0% 12.9%
US platinum <PLV0> 1527.40 9.70 0.6% 3.8%
US palladium <PAU0> 491.55 7.30 1.5% 20.2%
Gold <XAU=> 1240.20 10.95 0.9% 13.1%
Silver <XAG=> 18.89 0.55 3.0% 12.2%
Platinum <XPT=> 1523.50 13.50 0.9% 4.0%
Palladium <XPD=> 493.00 10.50 2.2% 21.6%
Gold Fix <XAUFIX=> 1237.50 0.00 0.0% 12.1%
Silver Fix <XAGFIX=> 18.63 75.00 4.2% 9.7%
Platinum Fix <XPTFIX=> 1516.00 5.00 0.3% 3.4%
Palladium Fix <XPDFIX=> 490.50 3.50 0.7% 22.0%
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
