BLBG: Gold Trades Below Two-Month High as Fed, Demand Weighed
Gold traded below a two-month high as investors weighed the outlook for U.S. borrowing costs to remain low and tension in Iraq against signs of weaker physical demand. Platinum and palladium declined.
Gold capped a third successive weekly advance last week after the Federal Reserve said it will keep interest rates at almost zero for a considerable time. The metal’s 12-year bull run ended in 2013 on expectations that the Fed would scale back stimulus as the economy strengthened.
Bullion is set for its first back-to-back quarterly gain since 2011, in part as escalating violence in Iraq and tension between Ukraine and Russia boosted haven demand. Militants in Iraq seized more territory at the weekend and U.S. President Barack Obama warned that the crisis may spill over into other countries. There’s still “little physical interest,” Australia & New Zealand Banking Group Ltd. wrote in a report today.
The metal gained “on the back of rising tension in Iraq, dovish remarks by Fed Chair Janet Yellen” and technical-related buying, Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. Demand from China is “unlikely to pick up any time soon. We expect gold to face strong hurdles in sustaining these recent gains.”
Bullion for immediate delivery was little changed at $1,315.53 an ounce by 9:24 a.m. in London, according to Bloomberg generic pricing. It reached $1,322.12 on June 20, the highest since April 15. Gold for August delivery was little changed at $1,316.30 on the Comex in New York.
Trading Volume
Futures trading volume was about the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Iraq’s crisis flared when Islamic State in Iraq and the Levant fighters this month captured Mosul, the country’s biggest northern city, and advanced to towns just north of Baghdad as Iraqi forces struggled to halt their military gains. Fighters from al-Qaeda breakaway group ISIL captured all the border crossings with Jordan and Syria, Hameed Ahmed Hashim, a member of the Anbar provincial council, said by phone yesterday.
Holdings in gold-backed exchange-traded products fell to 1,712.9 metric tons on June 20, the lowest since October 2009, data compiled by Bloomberg show. Hedge funds and other money managers increased their net-long position, or bullish bets, by 30 percent in the week to June 17, the biggest gain since February, U.S. Commodity Futures Trading Commission data show.
Silver for immediate delivery lost 0.2 percent to $20.8375 an ounce in London, after reaching $20.986 on June 20, the highest since March 18. Platinum fell 0.8 percent to $1,445.49 an ounce. Palladium declined 0.7 percent to $816.11 an ounce.
Members of the main labor union at the world’s largest platinum producers may return to work in two days should they accept a proposal to end a five-month pay-strike in South Africa. The Association of Mineworkers and Construction Union will present pay proposals made by companies to workers today. South Africa is the biggest supplier of platinum and the second-largest for palladium.
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 editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net John Deane, Sharon Lindores
