BLBG:Gold Holds Above 3-Month Low on Physical Demand, U.S. Impasse
Gold traded above a three-month low in London as lower prices increased physical demand and U.S. lawmakers struggled to reach an accord on raising the nation’s debt limit.
Gold fell to $1,260.61 an ounce on Oct. 11, the lowest since July 11, on expectations that an agreement would be reached. U.S. Senate Majority Leader Harry Reid said he’ll continue talks with Minority Leader Mitch McConnell after negotiations between President Barack Obama and House Speaker John Boehner broke down on Oct. 12.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Federal Reserve will slow debt purchases. The U.S. government has been partially shut down since Oct. 1 after lawmakers failed to pass a budget. Without action by Congress to raise the debt limit, the U.S. will exhaust its borrowing authority on Oct. 17.
“We’re seeing some quite good physical demand at these levels,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “The U.S. is the main story, focusing on the developments around the shutdown. Prices will continue to be volatile.”
Gold for immediate delivery rose 0.4 percent to $1,276.66 by 9:36 a.m. in London. Bullion for December delivery gained 0.6 percent to $1,276.10 an ounce on the Comex in New York. Futures trading volume was 20 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
U.S. Budget
Obama reiterated he will negotiate on the budget after the debt ceiling is raised and a partial government shutdown ends. Reid, who started talks Oct. 12 with McConnell, said yesterday discussions were “substantive” and he was “optimistic.” Senators plan to reconvene at 2 p.m. today in Washington, and the House at noon, with no votes until 6:30 p.m.
“The price has been influenced by what’s been happening in the U.S around their budget and the shutdown,” said Alexandra Knight, an economist at National Australia Bank Ltd. “It’ll continue to create volatility.”
Gold holdings in exchange-traded products dropped 7.6 metric tons to 1,909.8 tons on Oct. 11, the lowest since May 2010, data compiled by Bloomberg show.
Silver for immediate delivery rose 0.1 percent to $21.3585 an ounce in London. Palladium gained 0.5 percent to $715.90 an ounce. Platinum climbed 0.4 percent to $1,377.30 an ounce.
To contact the reporter 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
