BLBG:Gold Advances as Central Bank Purchases Counter Decline in ETPs
Gold rose, extending gains after the best week in a month, as buying by central banks and signs of increased physical demand countered continued outflows in investor holdings. Silver, platinum and palladium advanced.
Spot gold gained as much as 0.6 percent to $1,395.38 an ounce before trading at $1,394.15 by 6:18 p.m. in Singapore. Prices advanced 2 percent last week, the best showing since the five days to April 26, on speculation the U.S. Federal Reserve will maintain asset purchases and as China manufacturing slowed.
Russia and Kazakhstan expanded gold reserves for the seventh straight month in April, when prices tumbled into a bear market, International Monetary Fund data show. The volume for the Shanghai Gold Exchange’s benchmark cash contract jumped to a three-week high on May 24, while assets in gold-backed exchange-traded products dropped for a 15th week last week.
“We expect the trend of central bank buying to continue, especially in the emerging economies,” said Alexandra Knight, an economist at National Australia Bank Ltd. in Melbourne. “While expectations are for lower prices at the end of the year, physical demand, especially in Asia, has been very supportive.”
Gold is 17 percent lower this year as some investors lost faith in the metal as a store of value, reduced holdings in ETPs and shifted into riskier assets including equities. Asian stocks dropped for a fifth day today as China’s President Xi Jinping signaled a tolerance for slower economic growth. Markets in the U.S. and U.K. are shut today.
Gold Longs
Bullion for August delivery gained 0.5 percent to $1,393.70 an ounce on the Comex in New York. Money managers cut their net-long position by 9 percent to 35,686 futures and options in the week to May 21, the lowest since July 2007, U.S. Commodity Futures Trading Commission data show.
IMF data showed Turkey, Belarus, Azerbaijan and Greece joined Russia and Kazakhstan in adding gold to reserves last month. Mexico and Canada reduced holdings, the data showed. In China, the volume for cash bullion of 99.99 percent purity rose to 22,455 kilograms on May 24 from 12,521 kilograms on May 23, according to data on the Shanghai Gold Exchange’s website.
Cash silver climbed 1.3 percent to $22.695 an ounce, platinum rose 0.5 percent to $1,459.15 an ounce, and palladium gained 0.7 percent to $732.25 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
