BLBG:Gold Gains as Drop to Three-Month Low Spurs Purchases, ETPs Rise
Gold rebounded from the lowest price in more than three months as some investors ended bets on declines, with U.S. lawmakers seeking an agreement on a new budget to avert automatic spending cuts and tax rises.
Gold for immediate delivery gained as much as 0.3 percent to $1,676.85 an ounce and was at $1,675.50 at 1:45 p.m. in Singapore. The price fell to $1,661.10 yesterday, the lowest since Aug. 31, as optimism that a deal may be reached boosted equities and pared demand for the metal as an alternative asset.
U.S. President Barack Obama proposed a plan to cut about $1.2 trillion in spending over a decade and raise a similar amount in taxes, according to a person familiar with the talks. House Speaker John Boehner said he will push a measure that would include tax rises on income of more than $1 million. An agreement by Jan. 1 may avert the introduction of automatic tax rises and spending cuts, known as the fiscal cliff.
“You get a kneejerk reaction where the short positions are closing out,” said David Lennox, an analyst at Fat Prophets in Sydney, referring to ending bets on declines. “You wouldn’t want to be giving up gold at around $1,690 an ounce, the upside risk is significantly higher than the downside risk.”
Holdings in gold-backed exchange-traded products increased to a record 2,631.43 metric tons yesterday, data tracked by Bloomberg show. They’ve expanded 12 percent this year and are poised for the biggest annual gain since 2010.
The Dollar Index (DXY), a gauge against six counterparts, fell as much as 0.2 percent to the lowest level since Oct. 18. Gold typically trades counter to the U.S. currency.
Spot gold is up 7.2 percent this year, heading for a 12th annual gain, as central banks from the U.S. to China and Europe took action to prop up economies. Bullion for February delivery increased as much as 0.4 percent to $1,677.80 on the Comex.
Silver for immediate delivery rose as much as 0.6 percent to $31.815 an ounce and traded at $31.71 after losing 2 percent yesterday. Spot platinum advanced as much as 0.4 percent to $1,598.75 an ounce and was at $1,597.06. Palladium gained 0.2 percent to $689.50 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
