Gold Jumps to 11-Week High

Gold jumped to a 11-week high, topping $1,400 an ounce in spot trading, as sales of new U.S. homes fell more than forecast, boosting speculation that the Federal Reserve will maintain economic stimulus. Sales of newly built homes in July plunged more than 13 percent, the most in more than three years, government data showed today. The 394,000 annualized pace compared with a drop to 487,000 forecast by analysts in a Bloomberg survey. Fed policy makers said they are “broadly comfortable” in scaling back debt purchase if the economy strengthens.

“The new home-sales data tells us that all is not well with the economy, and the Fed needs to continue to support growth,” Tom Power, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview with Bloomberg. “The housing recovery is an important thing that the Fed will be looking at when it makes its decision on the timing of the tapering.” Gold for immediate delivery rose 1.5 percent to $1,396.30 at 3:55 p.m. New York time. Earlier, the price reached $1,400.38, the highest since June 7.

Source: Bloomberg