SD: Gold Futures Climb on Outlook for More Buying After Price Drop
Dec. 10 (Bloomberg) -- Gold gained for a second day in New York, the best run in three weeks, on speculation physical purchases may increase after prices reached a five-month low on the outlook for reduced U.S. stimulus. Silver advanced.
Gold touched $1,210.10 an ounce on Dec. 6, the lowest since July 5. Volumes for bullion of 99.99 percent purity on the Shanghai Gold Exchange, the benchmark spot contract, rose today to the highest since Nov. 28. The Bloomberg U.S. Dollar Index, a measure against 10 currencies, reached the lowest in almost three weeks.
Bullion is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Federal Reserve will scale back its $85 billion in monthly bond buying as the economy improves. Data last week showed U.S. payrolls rose more than forecast in November. Policy makers next meet Dec. 17-18.
“We see short-covering and some bargain hunting, coupled with signs of some physical demand in China,” David Govett, head of precious metals at Marex Spectron Group in London, wrote today in a report, referring to closing bets on price declines. “The market is still limited on the upside. We continue to wait for next week’s” Fed meeting, he said.
Bullion for February delivery rose 1.2 percent to $1,248.80 by 7:39 a.m. on the Comex in New York. A second day of gains would be the longest run since the period to Nov. 15. Futures trading volume was 14 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery gained 0.7 percent to $1,249.50 in London.
U.S. Stimulus
Fed Bank of Dallas President Richard Fisher said yesterday the central bank should begin dialing back its asset purchases as soon as possible. Policy makers may begin reducing bond buying at next week’s meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 poll.
“We don’t think much will happen in the gold market between now and when the next Fed policy statement comes out,” Edward Meir, an analyst at INTL FCStone, wrote in a note. “It remains to be seen how gold will react to the Fed clarifying its intentions. Some are arguing that most of the tapering has already been discounted.”
Silver futures for March delivery climbed 2 percent to $20.09 an ounce in New York. Palladium futures for March delivery rose 0.8 percent to $741.05 an ounce. Platinum for January delivery gained 1.5 percent to $1,389.20 an ounce.
