BGBL: Gold May Gain as Lowest Prices in Almost Three Months Fuel Investor Demand
Gold, little changed in London today, may gain as the lowest prices in almost three months spur physical demand.
The metal yesterday fell the most in more than three weeks, dropping as low as $1,158.13 an ounce, as a rally in global equities eroded demand for bullion as an alternative investment. Physical demand for gold from India, China and the wider Asian region was “very visible” as prices declined this week, UBS AG said today.
“Physical demand is still active,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “From a risk-reward perspective, this level presents a buying opportunity.”
Gold for immediate delivery added $3.93, or 0.3 percent, to $1,165.53 an ounce at 9:50 a.m. in London. Prices declined 1.9 percent yesterday, dropping for a third day. Bullion for December delivery was 0.4 percent higher at $1,166.20 on the Comex in New York.
European stocks climbed to a 12-week high today. Holdings in the world’s biggest gold-backed exchange-traded fund declined for a second day yesterday.
Bullion has slumped by around $100 since reaching a record $1,265.30 an ounce on June 21 on an easing of European financial turmoil and on signs the global economy is rebounding. Most European banks passed stress tests designed to show their ability to withstand a financial crisis, lenders and regulators said last week, helping to push the euro this week to an 11-week high against the dollar.
ETF Holdings
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined 0.91 metric ton to 1,300.83 tons yesterday, according to the company’s website. Global holdings of the metal by ETFs increased 0.54 ton to 2,065.52 tons yesterday, according to Bloomberg data from 10 providers.
Yesterday and July 26 were the UBS sales desk’s strongest two days since January for selling to India by volume, analyst Edel Tully said today in an e-mailed report.
“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.
Silver for immediate delivery in London added 0.2 percent to $17.6575 an ounce. Platinum gained 0.4 percent to $1,539.63 an ounce, while palladium was up 0.4 percent at $470.25 an ounce.
