US data delivers mixed signals

Gold i s up a shade after the US dollar flipflopped in the wake of mixed US data and as scepticism grew over whether Opec members would be able to implement production cuts that could fuel inflation.

The US dollar index, which measures the greenback against a basket of currencies, rose to a session high after stronger- than- expected data on US second- quarter economic growth and weekly jobless claims.

However, the US dollar pared gains after further data showed that contracts to buy previously owned US homes dropped in August to their lowest level since January.

When positive data is released, investors raise bets on a US interest rate hike, which would increase the opportunity cost of holding non- yielding bullion.

Spot gold was up 0.18 per cent at $ US1,323.61 an ounce by 2.02 pm EDT, having touched an overnight high of $ US1,325.80.

US gold futures settled up 0.2 per cent, or $ US2.30, at $ US1,326.

Gold pared earlier gains in the aftermath of a decision by Opec to make modest output cuts in the first such deal since 2008.

The news gave oil an initial boost, only for the price to slip as investors questioned whether the deal would be enough to rebalance a heavily oversupplied market.

“If Opec ends up achieving its objective, it could significantly change the outlook for global inflation and the need to have a hedge [ potentially through gold] against higher inflation,” said Danske Bank senior analyst Jens Pedersen.