BLBG; Gold Advances as Fed Growth Forecast Cut Revives Concern Recovery May Slow
Gold gained as a slide in stocks and commodities revived demand for the metal as a store of value after the Federal Reserve cut its growth forecast and China said that the pace of expansion eased in the second quarter.
Gold for immediate delivery climbed 0.3 percent to $1,211.27 an ounce at 2 p.m. in Singapore. The MSCI Asia Pacific Index of regional shares fell 0.7 percent and three- month delivery copper in London slumped as much as 1.8 percent after reports showed U.S. retail sales declined.
“The modest and uneven pace of economic recovery, reinforced by the Fed’s minutes and weak retail sales figures, may drive investors to seek out gold as a form of portfolio insurance,” said Ong Yi Ling, a Singapore-based analyst at Phillip Futures Pte.
Bullion has strengthened 10 percent this year, reaching an all-time high of $1,265.30 last month, on concern that Europe’s financial turmoil will spread, clouding the outlook for the global economy. Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,314.82 metric tons yesterday, the company’s website showed.
China’s economic growth eased to 10.3 percent in the second quarter after the government succeeded in tempering credit expansion, investment spending and property speculation. That compares with an 11.9 percent gain in January- March from a year earlier.
U.S. central bankers lowered their forecast for growth this year to a range of 3 to 3.5 percent, versus 3.2 to 3.7 percent in April, the minutes of the Fed meeting showed yesterday.
‘I’m Bullish’
“I’m bullish for gold, with the metal seen attempting to rise as far as $1,240 in the coming week,” said Wallace Ng, executive director of Asia commodities at ABN Amro Bank NV in Hong Kong. “Still, a major breakout to another record may be difficult for the present.”
Reports today may show a drop in June U.S. industrial production and a slowdown in New York-area manufacturing, economists said.
Gold for August delivery in New York rose 0.4 percent to $1,211.60 an ounce. Silver for immediate delivery, platinum and palladium were all little changed at $18.33 an ounce, $1,527.30 an ounce and $466.15 an ounce, respectively.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
