BLBG:Gold Pares Advance After Reaching Highest in Two Weeks on Cyprus
Gold pared gains to the highest level this month as prices above $1,600 an ounce cooled physical demand. Bullion’s premium over platinum widened to a two-month high as an unprecedented levy on Cyprus bank deposits reignited concern over Europe’s debt crisis.
Gold for immediate delivery rose 0.3 percent to $1,596.95 at 10:19 a.m. in Singapore, after jumping as much as 1.1 percent to $1,608.60, the most expensive since Feb. 27. One ounce of platinum bought as little as 0.9848 ounce of gold today, the least since Jan. 14, data compiled by Bloomberg show.
Gold, which has fallen 4.7 percent this year as an improving U.S. economy boosted the dollar, climbed for a third day even as the greenback strengthened 0.6 percent against a six-currency basket. Volume for the benchmark cash contract in Shanghai dipped below 10,000 kilograms for the past three days as prices rose. Still, it has been more than double the 2012 daily average since Feb. 18, when it reached a record 22,024 kilograms, according to exchange data.
“A knee-jerk reaction to Cyprus drove gold over $1,600, but physical buying that has been supporting the market in the past few weeks disappears at these levels,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies. “Inflation worries seem to be coming back into the market, however, investors are cautious ahead of the Fed meeting.”
Gold last week had the first back-to-back weekly gain since January on concern about rising inflation. Data for February showed the U.S. consumer-price index rose more than projected, while inflation reached a 10-month high in China. Federal Reserve policy makers, meeting tomorrow, are divided on the pace of stimulus that helped gold to rally for the past 12 years.
Cyprus Vote
Bullion for April delivery rose as much as 0.9 percent to $1,607.60 on the Comex in New York, also the highest price since Feb. 27, before trading at $1,595.60. Cyprus turmoil “must be very good for gold,” Lars Seier Christensen, CEO of Denmark- based Saxo Bank A/S, wrote on his blog.
Cypriot President Nicos Anastasiades is seeking to persuade lawmakers to back a plan to raise 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in the country, as part of a bailout agreement with euro-area finance ministers. Cyprus lawmakers vote on the legislation today, a day after originally planned.
Spot platinum fell as much as 1.1 percent to $1,572.75 an ounce, before trading at $1,575.75, dropping for a fifth day in the longest losing streak this year. Cash silver was at $28.765 an ounce, after earlier climbing as much as 1.3 percent. Palladium sank 2.7 percent to $755.15 an ounce.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
