BLBG:Gold Gains as Consumers Buy After Drop to 3-Month Low, ETPs Rise
Gold gained in London as a drop to the lowest level in more than three months and a weaker dollar spurred buying while holdings in exchange-traded funds rose to a record.
Physical demand from top buyer India has been “above average” this week, volumes in China are also strong, and buying out of Europe is “notable,” UBS AG said in a report today. The U.S. Dollar Index (DXY), a gauge against six counterparts, fell as much as 0.3 percent to the lowest level since Oct. 18., amid speculation U.S. lawmakers will reach an agreement on the budget, reducing demand for safer assets. Gold typically trades counter to the U.S. currency.
“Indian and Chinese buying was active on the lows overnight,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “After such heavy losses, activity remains subdued with some small-scale opportunistic buying on the lows. Weaker dollar is also somewhat helping bullion.”
Gold for immediate delivery gained 0.3 percent to $1,675.81 an ounce by 10:09 a.m. in London. The price fell to $1,661.10 yesterday, the lowest since Aug. 31. Bullion for February delivery increased 0.4 percent to $1,676.70 on the Comex in New York.
“Near-term gold sentiment is under pressure, but further out the view remains positive and in that sense current weakness ought to be considered a good buying opportunity,” Edel Tully, a London-based analyst at UBS, said in a report today. Commodity index re-balancing next month may boost gold demand by about 300,000 ounces, she wrote.
Bank Actions
Spot gold is up 7.2 percent this year, heading for a 12th annual gain, after central banks from the U.S. to China and Europe took action to prop up economies. 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.
In the U.S., House Speaker John Boehner offered a backup plan that would raise tax rates for Americans making more than $1 million a year, as he seeks compromise between fellow Republicans and the Obama administration. Standard & Poor’s raised Greece’s rating after a debt buyback.
Silver for immediate delivery rose 0.2 percent to $31.70 an ounce, up 14 percent for the year. Spot platinum advanced 0.3 percent to $1,598.50 an ounce, advancing 14 percent in 2012. Palladium gained 0.2 percent to $689.50 an ounce.
To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
