BLBG:Gold Advances in London as Weaker Dollar Spurs Demand
Gold gained in London as a weaker dollar and a decline in equities increased demand for an alternative investment. Silver also climbed.
The U.S. Dollar Index, a measure against six major currencies, fell as much as 0.5 percent today after declining the past two weeks. Global equities declined to a one-month low. Gold exchange-traded product holdings are at their lowest in two years amid concern the U.S. Federal Reserve will cut back its debt-buying program.
“We’re seeing dollar weakness again and that’s why we’re seeing a bit of buying,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “Also, equities are coming off. There’s good physical demand.”
Gold for immediate delivery rose 0.8 percent to $1,398.55 an ounce by 9:36 a.m. in London. Prices added 0.1 percent last week, cutting May’s loss to 6 percent. Bullion for August delivery was 0.4 percent higher at $1,398 on the Comex in New York. Futures trading volume was 28 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold slid 17 percent this year as equities rose and on speculation the Fed may scale back quantitative-easing measures that helped bullion cap a 12-year bull run in 2012. Holdings in ETPs fell to 2,148.2 metric tons on May 31, the lowest since May 2011, according to data compiled by Bloomberg. Still, last week’s sales were the least since March.
ETP Holdings
“One must wonder whether this is the beginning of the end of ETF heavy liquidations, or if it is somewhat a function of month-end,” Joni Teves, an analyst at UBS AG in London, wrote today in a report. “Although the absence of ETF selling will not necessarily be a game-changer, it would still represent a huge weight off gold.”
Hedge funds raised their net-long position, or bets on higher gold prices, by 35 percent to 48,096 contracts in the week to May 28, U.S. Commodity Futures Trading Commission data show. Speculators had held a record amount of so-called short contracts, or wagers on lower prices, the week before.
Silver for immediate delivery rose 0.9 percent to $22.4804 an ounce in London. Prices dropped for a fourth month in May, the longest losing streak since June 2012. Palladium was little changed at $749.48 an ounce. Platinum gained 0.8 percent to $1,469.28 an ounce. Platinum ETP holdings reached a record 64.22 tons on May 31, while palladium assets gained for the first time in two weeks that day, data compiled by Bloomberg show.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
