BLBG:Gold Trades Near One-Week High on Physical Purchases, Dollar
Gold was little changed near a one-week high in London on speculation last quarter’s record slump is spurring more physical demand and as the dollar retreated from a three-year high.
The dollar fell 0.3 percent against six major currencies after reaching the highest since July 2010 yesterday. Bullion slipped 23 percent in the second quarter, reaching a 34-month low of $1,180.50 an ounce on June 28, and some buyers have seen prices as an opportunity to purchase, ABN Amro Group NV said today in a report.
Gold slid 25 percent this year, wiping $61.8 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value as the Federal Reserve said it may slow bond buying this year. Minutes will be released today of the central bank’s June 18-19 meeting and Chairman Ben S. Bernanke is due to speak on economic policy.
“We are seeing a little bit of a correction in the dollar,” which is supporting gold, Afshin Nabavi, a senior vice president at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “Physical demand continues to be good.”
Gold for immediate delivery added 0.1 percent to $1,253.26 an ounce by 9:48 a.m. in London. It reached $1,260.70 yesterday, the highest since July 2. Bullion for August delivery rose 0.5 percent to $1,251.70 on the Comex in New York. Futures trading volume was about the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold Record
Bullion as much as doubled from 2008 to a record $1,921.15 in September 2011 as the U.S. central bank led nations in cutting interest rates and buying debt. Gold ETP holdings fell 10.1 metric tons to 1,983.6 tons yesterday, the lowest since May 2010, data compiled by Bloomberg show.
“Rising expectations for slower Fed asset purchases, with the quantitative easing end now potentially in sight, higher yields, a stronger dollar and continued improvements in the U.S. economy pose significant challenges to an already fragile gold market,” UBS AG said in a report yesterday. “While physical demand is expected to continue providing support, the weak price environment means that there is less urgency to buy.”
Still, global growth will struggle to accelerate this year, partly as China’s economy levels off and Europe’s recession deepens, the International Monetary Fund said yesterday. It reduced its forecast for world growth to 3.1 percent this year from 3.3 percent estimated in April.
Silver for immediate delivery lost 0.5 percent to $19.2162 an ounce in London. It’s the worst performer in the Standard & Poor’s GSCI gauge of 24 commodities this year. Palladium added 0.2 percent to $701.49 an ounce. Platinum was little changed at $1,367.50 an ounce in London.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
