BLBG:Gold Rebounds on U.S. Budget Optimism, Record Investor Holdings
Gold rebounded from the biggest drop in more than three weeks as investor holdings expanded to a record and optimism returned that the so-called fiscal cliff in the U.S. will be avoided, hurting the dollar.
Gold for immediate delivery rose as much as 0.2 percent to $1,723.70 an ounce and traded at $1,720.38 at 1:52 p.m. in Singapore. The price dropped 1.3 percent yesterday, the biggest fall since Nov. 2, on concern that a U.S. deal won’t be agreed. Bullion for February delivery gained as much as 0.4 percent to $1,726 an ounce on the Comex, and was at $1,722.20.
Holdings in exchange-traded products expanded to 2,615.89 metric tons yesterday, according to data tracked by Bloomberg. The Dollar Index (DXY) was little changed today after fluctuating yesterday on the outlook for the $607 billion combination of tax increases and spending cuts that may be implemented in January should lawmakers fail to reach accord on the budget.
“We’re not seeing signs of any significant follow-through selling,” said Nick Trevethan, a senior commodities strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “The factors supporting gold really haven’t gone away. You still have large amounts of liquidity in the system, you’re seeing central banks trying to support markets.”
Gold, little changed this month, has climbed 10 percent this year after central banks from the U.S. to Europe took more steps to boost growth, raising concern currencies may weaken. Gold rallied 70 percent as the Federal Reserve bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011.
Republican House Speaker John Boehner said he is optimistic officials can “avert this crisis sooner rather than later.” Treasury Secretary Timothy F. Geithner meets today with congressional leaders to discuss tax increases and spending cuts.
Silver for immediate delivery dropped as much as 0.5 percent to $33.600 an ounce and traded at $33.62, falling for a third day. Spot platinum climbed as much as 0.5 percent to $1,613 an ounce and was at $1,607.87. Palladium fell 0.5 percent to $671.50 an ounce.
To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
