BLBG:Gold Swings Between Gains and Drops Following Bernanke Comments
Gold swung between gains and drops in London, following the biggest retreat in almost two weeks, as investors assessed Federal Reserve Chairman Ben S. Bernanke’s comments on the central bank’s asset purchases.
The Fed’s bond purchases “are by no means on a preset course” and will depend on the economy’s performance, Bernanke said yesterday. Gold has declined 6.5 percent since he signaled May 22 the stimulus may slow. The Bloomberg Dollar Index, measuring the greenback against 10 currencies, climbed for a second day. Gold and the dollar tend to move inversely.
“The market is confused, as Bernanke’s message was confusing,” said Mark O’Byrne, executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “As ever, it is best to watch what central bankers actually do, rather than what they say.”
Gold for immediate delivery was 0.3 percent higher at $1,279.57 an ounce by 10:15 a.m. in London after rising as much as 0.5 percent and falling 0.1 percent. Prices slid 1.2 percent yesterday, the most since July 5. Gold for December delivery rose 0.2 percent to $1,280.90 an ounce on the Comex in New York.
Comex futures trading volume was 46 percent lower than the average for the past 100 days for this time, according to data compiled by Bloomberg. Historic volatility for the period was at 27.4, from 18.6 on June 19, the data show.
Investor Demand
“Shifting sentiment regarding the timing of Fed tapering will impact gold and make trading volatile,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “Since investment demand is weak, with ongoing gold ETF liquidation, a strong physical market is crucial if gold prices are not to sink considerably further.”
Holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, fell to 936.07 metric tons yesterday, the lowest since February 2009. Prices may be near the bottom as demand in India and China, the largest consumers, is expected to exceed last year’s levels, according to Marcus Grubb, managing director of investment research at the World Gold Council.
“We are now in the summer doldrums and there is an increasing lack of liquidity,” said O’Byrne at GoldCore. “This could result in a further bout of gold weakness.”
Palladium slid 0.5 percent to $730.50 an ounce. Switzerland imported 211 kilograms (465 pounds) of the metal from Russia last month, compared with 195 kilograms in May, according to data from the Swiss Federal Customs Administration. Total imports for the first half were 14.67 tons, triple 2012’s full-year volume, according to UBS AG.
“Sizeable imports from Russia cast some doubts on expectations of minimal sales from government stocks and dwindling stockpiles,” UBS analyst Joni Teves said in a report.
Spot platinum added 0.3 percent to $1,411.60 an ounce. One ounce of platinum bought as much as 1.1118 ounces of gold, the most since August 2011. Silver for immediate delivery gained 0.4 percent to $19.4209 an ounce after a 3.4 percent drop yesterday, the biggest since June 26.
To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
