By Claudia Assis and Chris Oliver, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures declined Wednesday, retracing the previous session’s steep gains but keeping above the psychologically important $1,800-an-ounce mark.
Gold for December delivery GC1Z +0.10% declined $9, or 0.5%, to trade at $1,821.20 on the Comex division of the New York Mercantile Exchange.
Gold has risen roughly 12% so far this month, and nearly 30% year to date. The contract jumped $38.20, or 2.1%, to $1,829.80 an ounce in New York on Tuesday. See report on Tuesday’s gold trading.
Gold has recently drawn interest from non-traditional buyers, such as hedge funds and wealthy individuals, which has made it difficult to assess price direction, Sunil Kashyap, a managing director at Scotia Capital in Hong Kong.
“Any level below $1,800 per ounce should see some buying because when prices went to $1,900, many investors were on the sidelines,” said Kashyap.
Meanwhile, China’s bullion-accumulation program was in the spotlight Wednesday after a People’s Bank of China adviser told the China Business News that Beijing should increase its holdings of gold and other commodities.
“China should realize that gold is an important strategic reserve, and should increase its holdings over the long term, buying on price dips,” PBOC adviser Xia Bin said, according to a Dow Jones Newswires report. “In the past we have not established this as an investment principle, but now we must.”
Gold mining production is rising, Commerzbank analysts said in a research note, citing a survey by an Australian consulting firm.
Australia’s gold production surged by almost 10% to 270 metric tons in fiscal 2010/2011, they said. From March to June, the country produced 68.1 metric tons more, or 5%, compared to the previous quarter.
Australia is the world’s second largest mining producer. Peru, the world’s sixth-largest producer, has reported a rise in mining output of 9.1% in July compared to the same month last year.
“Despite these efforts, production is unlikely to keep pace with demand,” the Commerzbank analysts said.
