BGBL: Gold Rebounds From Decline to Three-Month Low as Physical Demand Improves
Gold climbed, rebounding from the lowest level since May 5, as some investors took advantage of yesterday’s decline to build bullion holdings.
Gold for immediate delivery rose 0.2 percent to as much as $1,164.30 an ounce before trading at $1,163.43 at 1:10 p.m. in Singapore. The price dropped to as low as $1,158.13 an ounce yesterday as a rally in global equities eroded demand for the metal as an alternative investment. August-delivery futures in New York rose 0.4 percent to $1,166.20 an ounce.
“After a big slide overnight, there’s some sporadic buying from Asian players,” said Chae Un Soo, a Seoul-based trader with KEB Futures Co. “Still, safe-haven demand for gold is weakening as global equities rise, reviving risk appetite.”
Bullion has slumped by around $100 since reaching a record $1,265.30 on June 21 as European financial turmoil eased and on signs of the global economy is rebounding. Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, decreased 0.91 metric tons to 1,300.83 tons as of yesterday, according to figures on the company’s website.
Asian equities gained for a fourth day on optimism that companies will report higher earnings on the back of a global recovery. South Korea’s current-account surplus widened to a one-year high in June, data showed today, while German consumer confidence will improve in August, research firm GfK AG said yesterday.
“The current decline in the gold price is probably only short-lived,” Eugen Weinberg, head of commodity research with Commerzbank AG, wrote in a report yesterday. “There are some religious holidays from the end of August” in India, the world’s largest gold consumer, which may propel demand, he said.
Gold Investments
Gold investment in bullion-backed exchange-traded funds grew by 273.8 tons in the second quarter, the second-largest quarterly inflow ever, according to the World Gold Council. This brought the total amount of gold held in the funds the Council monitors to more than 2,000 tons, or $81.6 billion, it said.
Zijin Mining Group Co., blamed for the gold industry’s worst waste leakage in China in two years, said it will limit production at a mine in the accident area. Output will be reduced by about 1 ton this year because of the restriction, China’s biggest gold producer said in statements to the Shanghai and Hong Kong stock exchanges yesterday.
Silver rose 0.4 percent to $17.695 an ounce, platinum increased 0.7 percent to $1,544.63 an ounce and palladium was little changed at $469.05 an ounce at 1:14 p.m. in Singapore.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
