BLBG: Gold May Gain in New York After a Slide to a Seven-Week Low Spurs Buying
Gold may rebound from the biggest drop in three weeks in New York as a slide to a seven-week low spurs more physical purchases.
Gold dropped to $1,654.40 earlier today, the lowest since Oct. 25, as the dollar rose against the euro after Fitch Ratings and Moody’s Investors Service said yesterday that a European Union summit last week offered little help in ending the region’s debt crisis. Holdings in exchange-traded products backed by gold climbed to a record. UBS AG said its physical gold flows to India yesterday were the most since Oct. 20.
“This pullback finally encouraged a response from the physical community,” Edel Tully, an analyst at UBS in London, wrote in a report. “Market participants are placing a lot of importance on physical buyers to step in and put a floor under gold. The physical response seen this week, though not yet enough to call a trend, should somewhat calm these investors.”
Bullion for February delivery was little changed at $1,667.90 an ounce by 8:18 a.m. on the Comex in New York, after earlier today dropping as much as 0.8 percent. It fell 2.8 percent yesterday. Immediate-delivery gold was also little changed at $1,664.55 in London.
While bullion has retreated 13 percent since touching a record $1,923.70 on Sept. 6, it’s up 18 percent this year and set for an 11th straight annual gain as investors seek to diversify away from equities and some currencies. The metal is poised to enter a bear market as it slides to $1,475, economist Dennis Gartman, who sold the last of his gold yesterday, wrote today in his daily Gartman Letter.
‘Store of Value’
“The price slide comes partly on the back of a very firm U.S. dollar,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, wrote in a report. We “do not exclude the possibility of a further drop in the price of gold in the short term. That said, we are still convinced that gold can serve mid- and long-term as a store of value.”
Gold holdings in exchange-traded products rose 3.8 metric tons to an all-time high of 2,360.5 tons yesterday, according to data compiled by Bloomberg. Assets jumped 84.8 tons last month, the most since July.
Imports by India, the largest consumer, may decline as much as 16 percent to 800 tons from a record as the rupee’s plunge to an all-time low against the dollar boosts local prices, according to the Bombay Bullion Association. In China, the second-biggest consumer, gold imports to the mainland from Hong Kong surged 51 percent to 86.3 tons in October to a monthly record, according to Hong Kong government data.
Silver for March delivery was little changed at $31.295 an ounce. Palladium for March delivery was little changed at $661 an ounce. Platinum for January delivery was 0.5 percent higher at $1,494.50 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: John Deane in London at jdeane3@bloomberg.net
