BLBG:Gold Set for Best Week Since August; ETPs Extend Gain to Record
Gold climbed to a three-week high and is poised for its best performance in 11 weeks as prospects of more stimulus in the U.S. and the debt crisis in Europe boosted demand, while exchange-traded products rose to a record.
Spot gold increased as much as 0.2 percent to $1,735.45 an ounce, the most expensive since Oct. 19, and traded at $1,734.28 an ounce at 9:52 a.m. in Singapore. A fifth day of gains would be the longest rally since August. Assets held in exchange- traded products totaled 2,596.106 metric tons yesterday, data compiled by Bloomberg show.
Gold has risen 3.4 percent this week, the most since the week to Aug. 24, on speculation U.S. policy makers will add to stimulus following President Barack Obama’s re-election and on concern Greece may fail to meet bailout requirements. Bullion traders are the most bullish in 11 weeks, with 25 of 33 analysts surveyed by Bloomberg expecting gains next week.
“The unfortunate truth is that the easiest political way out of the federal deficit is to continue to inflate your way out of it a little at a time,” Steven Feldman, chief executive officer at Gold Bullion International LLC, wrote in an e-mail. “The negative real interest rates that have bolstered gold prices for so long are not likely to end in the short run. The Euro crisis is far from resolved.”
Gold for December delivery rose as much as 0.5 percent to $1,735.40 an ounce on the Comex in New York, before trading at $1,734.90. Obama faces the challenge of the so-called fiscal cliff, a combination of automatic spending reductions and expiring tax cuts that amounts to $607 billion starting January. The Congressional Budget Office says that allowing the changes would lead to a recession in the first half of 2013.
Growing Hoard
Bullion-backed ETP holdings have expanded 10 percent this year as central banks from the U.S. to Europe and Asia took steps to bolster their economies hurt by Europe’s debt crisis. They are now the third-largest hoard when compared with national reserves, World Gold Council and International Monetary Fund data showed.
Cash silver rose to a one-week high of $32.4575 an ounce, before trading at $32.425. The metal is 4.9 percent higher this week for the best performance in more than two months.
Spot platinum rose 0.6 percent to $1,552.50 an ounce and is set for the first weekly advance in five weeks. Palladium gained 0.7 percent $619 an ounce, heading for a second weekly increase.
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
