BLBG:Gold Gains for First Time in Three Days as ETP Holdings Expand to Record
Gold gained for the first time in three days, extending a second monthly advance, on signs that investment demand increased before the European Central Bank allots a second round of funds to shore up the region’s lenders.
Spot gold rose as much as 0.4 percent to $1,774.23 an ounce, and was at $1,773.24 at 3:13 p.m. in Singapore. It dropped 0.3 percent yesterday as the euro declined 0.4 percent against the dollar. Bullion has climbed 2 percent in February, touching $1,787.55 on Feb. 23, the highest level since Nov. 14.
Gold holdings in exchange-traded products expanded for a fifth day to a record 2,398.161 metric tons yesterday, according to data tracked by Bloomberg. The ECB will lend banks another 470 billion euros tomorrow in a second offering of unlimited three-year funds, according to the median of 28 estimates in a Bloomberg News survey, aimed at ensuring lenders in the region have access to funding amid the debt crisis.
“Gold is consolidating recent gains, seeking impetus for the next leg higher past $1,800, but it doesn’t look like today, given the market sentiment,” said Wang Xiaoli, chief investment strategist at Citic Futures Co. “Gold is trapped in a range because the dollar’s strength and Europe’s ongoing crisis pulls it in opposite directions.”
Gold rallied 13 percent this year, extending an 11-year bull run, as investors seek to hedge against falling equities, weaker currencies and inflation. The dollar slid 2.4 percent this year against a six-currency basket that includes the euro, which climbed 0.3 percent versus the greenback today.
April-delivery gold was little changed at $1,773.40 an ounce on the Comex in New York, while oil declined for a second day, helping drive Asian stocks higher.
‘Set the Table’
“I like the $1,700 to $2,000 range based on the macroeconomic factors as they exist today,” Chuck Jeannes, chief executive officer at Goldcorp Inc. (G), the second-largest producer by market value, said in an interview yesterday. “It’s certainly set the table for a much higher gold price.”
While a higher price may reflect a lack of confidence in key currencies and low returns on other assets, there is little scope for the metal to play a more formal role in the international monetary system, U.K. research institute Chatham House said. The metal can be used to hedge against currency devaluation and other risks as part of a portfolio, but not on its own, a task force at the London-based institute reported.
Belarus raised its reserves 5 tons to 42.6 tons in January, Kazakhstan increased them 7.6 tons to 89.6 tons and Turkey boosted them 4.1 tons to 199.4 tons, according to data from the International Monetary Fund. Central banks, the largest holders, are joining investors in buying bullion to diversify assets.
Best Performer
Spot silver rose 0.4 percent to $35.53 an ounce, 7.1 percent higher in February and set for a second monthly gain. This year’s best-performing precious metal rallied 28 percent in 2012 as investors sought to protect their wealth with holdings of a metal that may also benefit from economic growth.
Silver holdings in exchange-traded products rose to a two- week high of 17,680.52 tons yesterday, up 2.2 percent this year. One ounce of gold bought as little as 49.8193 ounces of silver today, the least since Nov. 1.
Cash platinum was little changed at $1,706 an ounce, heading for a 7.4 percent advance this month. Prices may “correct” on any resolution to production delays in South Africa, Societe Generale SA said in a report.
Palladium lost 0.2 percent to $704 an ounce, 2.7 percent higher this month. It’s headed for a third monthly gain, the longest rally in a year.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
