BLBG:Gold Swings as Investors Weigh Stimulus After Home Sales Decline
Gold swung between gains and losses after climbing to the highest level since June as investors weighed the outlook for stimulus in the U.S., with a slump in new-home sales boosting the case for sustained debt-buying.
Bullion for immediate delivery rose as much as 0.7 percent to $1,407.18 an ounce, the highest since June 7, before dropping 0.5 percent. The metal was little changed at $1,398.36 at 7:42 a.m. in London. Gold for December delivery rose as much as 0.8 percent to $1,407 on the Comex, also the highest since June 7.
U.S. new-home sales fell more than 13 percent in July, data showed Aug. 23, sending gold above $1,400 on speculation the Federal Reserve’s $85 billion a month of asset purchases may be sustained for longer. Minutes released on Aug. 21 showed policy makers were comfortable with Chairman Ben S. Bernanke’s plan to taper this year if the economy strengthens. Bullion holdings in the SPDR Gold Trust expanded on Aug. 23 by the most in a year.
“QE is still going to be the driving factor until such time as it’s stopped or until they start tapering off,” said David Lennox, a resource analyst at Fat Prophets in Sydney, referring to quantitative easing by its initials. “It’s going to cause volatility.”
Assets in the SPDR, the largest gold-backed exchange-traded product, gained 0.7 percent to 920.13 metric tons, the biggest percentage rise since last August. That helped holdings expand for a second week, the best run since the period to Dec. 7.
Job Market
Gold has rallied 18 percent from a 34-month low of $1,180.50 in June as Asian demand for jewelry strengthened and Fed policy makers weighed when to begin curbing bond purchases that they pledged to maintain until the job market improves. Sixty-five percent of economists in a Bloomberg survey this month said that the first reduction in stimulus would come at the Sept. 17-18 meeting of the Federal Open Market Committee.
Gold rose 70 percent from December 2008 to June 2011 as the U.S. central bank pumped more than $2 trillion into the financial system by purchasing debt, increasing investors’ concern about currency debasement and accelerating inflation.
Silver for immediate delivery climbed as much as 1 percent to $24.3045 an ounce, the highest since May 6, before trading at $24.201.
Platinum gained as much as 0.7 percent to $1,550.50 an ounce, the highest level since April 9, and traded little changed at $1,542.25. Palladium advanced as much as 0.6 percent to $755.50 an ounce, and was at $753.50.
To contact the reporter on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net
