Gold Rallies Above $1,300 on Outlook for Stimulus, China Demand Gold jumped to a one-month high as reduced expectations that the U.S. Federal Reserve will soon taper monetary stimulus weakened the dollar, while investors speculated demand may improve after China changed lending rules. Spot gold climbed as much as 1.8 percent to $1,319.99 an ounce, the highest level since June 20, and traded at $1,316.11 at 9:34 a.m. in Singapore. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, fell 0.7 percent last week, the least since the five days to June 14. Gold rose 0.8 percent last week, capping the first back-to-back weekly gains since May, after Fed Chairman Ben S. Bernanke indicated that it’s too early to decide whether to begin scaling back bond purchases in September, weakening the dollar. The People’s Bank of China said July 19 it ended a floor on lending rates, a move that may offer consumers more spending power. “Investor sentiment toward gold seems to be turning more positive after Bernanke’s comments last week and we’re probably going to see more short-covering in the near term as the U.S. dollar gets sold off,” Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks, said by phone from Hangzhou. Short-covering refers to ending of bets on losses. Gold slid 22 percent this year, wiping more than $58 billion from the value of ETP holdings, after some investors lost faith in the metal as a store of value. Bullion entered a bear market in April, after rallying for 12 years, as unprecedented money printing by central banks around the world failed to spur inflation. The Bloomberg Dollar Index dropped for a second day, while crude in New York gained for the fourth straight session after settling at a 16-month high on July 19. “As oil prices rise, especially in the U.S., inflation, which hasn’t been an issue and a reason gold is lower this year, may start to pick up,” said Lv. “Any move to stem a slowdown in China may spur physical demand.” Gold for December delivery rose as much as 2.4 percent to $1,325 an ounce on the Comex in New York, the highest since June 20, before trading at $1,313.70. Speculators increased their net-long position by 56 percent to 55,535 futures and options by July 16, the highest since June 4, U.S. Commodity Futures Trading Commission data show. Short contracts fell the most since November after reaching a record the previous week. Silver for immediate delivery advanced as much as 2.1 percent to $19.93 an ounce, before trading at $19.8245. One ounce of gold bought as much as 66.6 ounces of silver on July 19, the most since August 2010. Spot platinum climbed as much as 0.9 percent to $1,442.20 an ounce, the highest price since June 19, and was at $1,140.20. Palladium added 0.4 percent to $749.85 an ounce.
Posted on: Mon, 22 Jul 2013 02:17:00 +0000
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