BLBG:Gold Rises for Second Day on Gain in SPDR Assets as Dollar Falls
Gold rose for a second day as dollar weakness and buying of exchange-traded products signaled demand for precious metals. Silver, platinum and palladium advanced.
The dollar fell for a second day against a six-currency basket. Assets in the SPDR Gold Trust, the biggest gold ETP, expanded yesterday for the first time since May 9, according to data on the company’s website. Gold has dropped 5 percent this month as the dollar index advanced 2.1 percent.
“Strong physical demand, especially in Asia, is supporting gold and could contribute to higher prices,” said Mark O’Byrne, executive director of GoldCore Ltd. in Dublin. “Gold is oversold on a host of benchmarks and sentiment towards gold today is negative which is bullish from a contrarian perspective.”
Gold for immediate delivery climbed 0.8 percent to $1,403.74 an ounce by 11:29 a.m. in London. Futures for August delivery advanced 0.6 percent to $1,400.50 an ounce on the Comex in New York. Trading of gold on Comex was 45 percent higher than the average for the past 100 days at this time of day, according to data compiled by Bloomberg.
Gold has dropped 16 percent this year and entered a bear market last month as the U.S. Dollar Index strengthened 4.6 percent and the MSCI All-Country World Index rallied 9 percent.
Cinda Futures
“We see a bit of safe-haven trade coming in,” said Yang Shandan, a senior trader at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “Physical buyers have helped to limit declines but they have also become more price-sensitive and tend to stay on the sidelines near $1,400.”
The 30-week correlation coefficient between the U.S. Dollar Index and bullion is now at -0.55, a level last reached in December. A figure of -1 means the two move opposite to each other. The correlation was 0.26 in April.
Silver gained 0.8 percent to $22.68 an ounce, heading for a fourth monthly decline. Platinum rose 0.4 percent to $1,460.80 an ounce, also heading for a fourth monthly drop. Palladium advanced 0.3 percent to $750.59 an ounce, heading for a monthly advance.
Holdings in platinum-backed ETPs, up 35 percent this year, reached a record 63.12 tons yesterday, according to data compiled by Bloomberg. Assets in palladium products gained 15 percent this year to 66.2 tons.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net
