BLBG:Gold Swings as Investors Wait for Bernanke’s Testimony
Gold swung between gains and losses in London as investors weighed the U.S. Federal Reserve’s outlook for stimulus and on speculation that higher prices may slow the increase in physical purchases.
Bullion advanced last week as Fed Chairman Ben S. Bernanke called for maintaining asset purchases. Bernanke, scheduled to testify before a congressional committee tomorrow, said that “highly accommodative monetary policy for the foreseeable future is what’s needed.”
Gold slid 23 percent this year, wiping $59.7 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value. Declines accelerated last quarter as the Fed indicated its bond-purchase program could be tapered should the job market improve. Gold’s drop to a 34-month low on June 28 spurred more physical demand.
“Market participants continue to await more clarity from the Federal Reserve regarding its stance on the asset purchases program,” analysts at Mumbai, India-based AnandRathi Commodities Ltd. said today in a report. “Physical demand, meanwhile, continues to be strong but is showing signs of fading as prices approach the psychological $1,300 barrier.”
Gold for immediate delivery was little changed at $1,284.56 an ounce by 9:56 a.m. in London. Prices rose as much as 0.3 percent and fell as much as 0.6 percent today and reached $1,298.73 on July 11, the highest since June 24. Bullion for August delivery was also little changed at $1,283.30 on the Comex in New York. Futures trading volume was 33 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Gold ETP holdings were little changed at 1,986.2 metric tons yesterday. They declined to 1,983.6 tons last week, the lowest since May 2010, data compiled by Bloomberg show. The Fed buys $85 billion of Treasuries and mortgage debt each month as part of its quantitative-easing program.
“Investors remain sidelined before Bernanke’s testimony this week for clues on the Fed’s stance on monetary stimulus,” said Xiang Nan, an analyst at CITIC Securities Futures Co., a unit of China’s biggest listed brokerage. “Price gains are expected to stall around $1,300 as physical buyers stay away.”
Silver for immediate delivery fell 0.7 percent to $19.8415 an ounce in London. Palladium slipped 0.6 percent to $728.19 an ounce. It reached $733.65 yesterday, the highest since June 14, as it gained for a seventh day in the best run since September. Platinum dropped 0.8 percent to $1,413.99 an ounce, after reaching $1,426.25 yesterday, the highest since June 19.
One ounce of platinum bought as much as 1.1114 ounces of gold yesterday, the most since August 2011.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
