BLBG:Gold Snaps Three-Day Drop on Signs of Increased Chinese Demand
Gold gained, rebounding from a three- day drop that touched the lowest price in more than four months, on signs of increased demand in China and as the dollar weakened.
Spot gold rose as much as 0.4 percent to $1,653.05 an ounce, and was at $1,649.30 at 11:38 a.m. in Singapore. Volumes for cash bullion of 99.99 percent purity on the Shanghai Gold Exchange surged to 19,504.8 kilograms yesterday, according to a statement on the bourse’s website. That’s the highest ever for the benchmark contract, according to data tracked by Bloomberg.
Cash bullion slumped to $1,625.85 on Jan. 4, the cheapest since Aug. 21, after minutes from the U.S. Federal Reserve indicated that policy makers may end the bank’s bond-buying program this year, boosting the Dollar Index (DXY) to a six-week high. The six-currency gauge fell for a second day today on speculation recent declines in the euro and yen were excessive.
“The recent price drop has attracted some purchases, evidenced by the volumes in China,” said Feng Liang, an analyst at GF Futures Co., a unit of China’s third-biggest listed brokerage. “Whether this rebound can be sustained depends on the emergence of physical buyers, especially from China and India, at a time when demand is meant to be strong.”
In China, demand typically picks up before Christmas and lasts through the Lunar New Year in February. India’s wedding season, a peak-consumption period for gold jewelry, runs from November to December and from late March through early May. The countries are the two biggest bullion consumers.
China Volumes
Cash bullion of 99.99 percent purity retreated 0.6 percent to 331.55 yuan a gram ($1,656.11 an ounce) on the Shanghai Gold Exchange. Yesterday’s record volumes followed the one-year high of 9,309 kilograms on Jan. 4. Gold for June delivery slid 0.6 percent to 336.62 yuan a gram on the Shanghai Futures Exchange.
Gold for February delivery advanced 0.2 percent to $1,649.30 an ounce on the Comex. Holdings in exchange-traded products backed by gold, which reached an all-time high of 2,632.516 metric tons on Dec. 20, stood little changed at 2,623.646 tons on Jan. 7, data compiled by Bloomberg showed.
Cash silver rose 0.2 percent to $30.2073 an ounce, after dropping to the lowest since August on Jan. 4. Spot platinum was little changed at $1,556.50 an ounce after three days of losses. Palladium was also little changed at $669.75 an ounce.
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
