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Gold Advances in New York as Prices Near Three-Month Low Spur Purchases
Gold gained for a second day in New York on speculation prices near a three-month low will spur increased physical and investment demand.
The metal slid yesterday to the lowest level since May 5. European equities this week climbed to a 12-week high, while the euro today rose to the highest level since May 10 against the dollar. Gold and the greenback usually move inversely. Bullion holdings in the world’s biggest exchange-traded fund yesterday dropped the most in more than two years.
“Gold has gained ground on a mix of physical and investment bargain-hunting,” said James Moore, an analyst at TheBullionDesk.com in London. “Given the reduction in speculative/investment stale longs in recent weeks, and with technical indicators nearing oversold, investors may view current levels as a good buying opportunity.”
Gold futures for December delivery added as much as $9.60, or 0.8 percent, to $1,172 an ounce on the Comex in New York and were at $1,165.50 at 8:12 a.m. local time. Prices fell as low as $1,159.30 yesterday. The metal for immediate delivery in London was little changed at $1,163.10.
Bullion rose to $1,166 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,157 at yesterday’s afternoon fixing. The 14-day relative- strength index for futures was at 36.06. Some analysts view a level of 30 as a signal that prices may be set to gain.
Long Position
Speculators including hedge funds cut their net-long position, or bets prices will rise, in New York gold futures by 13 percent, according to U.S. Commodity Futures Trading Commission data for the week ended July 20.
Bullion futures have slumped 7.9 percent since reaching a record $1,266.50 an ounce on June 21 on an easing of European financial turmoil and on signs the global economy is rebounding. Lenders and regulators last week said most European banks passed stress tests designed to show their ability to withstand a financial crisis.
European confidence in the economic outlook rose to the highest in more than two years in July, the European Commission in Brussels said today. German unemployment declined for a 13th month, the Federal Labor Agency said.
Investors are shifting money into riskier assets, Eugen Weinberg, Frankfurt-based head of commodity research with Commerzbank AG, wrote in a report. Still, “in the mid to long term, physical buying interest is expected to pick up on the currently low price level and thus prevent a clear slide” for bullion, he wrote.
ETF Holdings
Assets in the SPDR Gold Trust, the biggest ETF backed by the metal, fell 18.55 metric tons to 1,282.28 tons yesterday, according to the company’s website. That’s the biggest drop since a 20.56-ton decline in April 2008. ETF Securities Ltd. said investors last week withdrew $110 million, the most since March, from its precious-metals products.
“With the European bank stress tests having passed without major mishap, European macro data looking slightly better and the euro strengthening, it appears that some of the shorter-term safe-haven flows into gold are leaving,” London-based ETF Securities said in a report.
Silver for September delivery in New York increased 0.8 percent to $17.575 an ounce. Platinum for October delivery added 0.7 percent to $1,552.40 an ounce. Palladium for September delivery gained as much as 3.5 percent to a five-week high of $484.95 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net
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