BLBG:Gold Rises as Investors Increase ETP Holdings to All-Time High
Gold gained as investors boosted holdings in exchange-traded products to a record and as a drop from the highest price in two weeks encouraged buying.
Spot gold advanced as much as 0.2 percent to $1,720.50 an ounce and traded at $1,719.53 at 10:21 a.m. in Singapore. A fourth day of gains would be the longest since August. The metal reached $1,731.82 yesterday, the most expensive since Oct. 23. Holdings in ETPs backed by bullion rose the most in a month to 2,591.995 metric tons, data compiled by Bloomberg show.
Gold has rallied 10 percent this year as central banks including the Federal Reserve took steps to shield their economies hurt by Europe’s crisis. President Barack Obama elected for a second term faces the task of reaching a compromise with Congress on lowering the deficit before more than $600 billion in tax increases and spending cuts start in January. European Central Bank President Mario Draghi said the region’s crisis is affecting Germany.
“Policy makers are caught between an effort to lower the deficit without stifling economic growth,” John Hummel, who manages $400 million as chief investment officer of AIS Group, said in an e-mail.
Gold for December delivery rose 0.3 percent to $1,719.50 an ounce on the Comex in New York. The Fed said Oct. 24 it will maintain $40 billion in monthly purchases of mortgage debt and probably hold interest rates near zero until mid-2015. The dollar was little changed against a six-currency basket including the euro after gaining 0.2 percent yesterday.
U.S. Policy
“Without drastic changes to both fiscal and monetary policy, the election is largely symbolic and will not shore up the long-term trend of declining confidence in the U.S. dollar,” said Hummel, referring to the U.S. presidential result. “We are over weighted in gold and view it as a stable haven in an increasingly unstable financial landscape.”
Bullion of 99.99 percent purity on the Shanghai Gold Exchange fell for the first time in three days, dropping 0.5 percent to 345.52 yuan a gram ($1,722.53 an ounce). Volumes for the benchmark cash contract fell to 3,023 kilograms yesterday from a one-month high of 5,222 kilograms on Nov. 6. China’s Communist Party gathers today in Beijing to choose new leaders in the world’s second-largest economy.
Cash silver rose as much as 0.5 percent to $31.98 an ounce, before trading at $31.95. Spot platinum climbed 0.2 percent to $1,546.50 an ounce, rebounding from a 0.7 percent drop yesterday. Palladium was little changed at $613 an ounce after falling 1 percent yesterday.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
