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Gold May Advance as Biggest Monthly Drop in 2010 Spurs Investment Demand
Gold, little changed in New York today, may gain on speculation that the metal’s biggest monthly decline this year will increase demand.
Bullion is set for a third weekly drop and the first monthly slide since March. Prices have slumped 5.8 percent in July, the most since December’s 7.3 percent retreat, and this week fell to a 12-week low as holdings in gold-backed exchange- traded funds slid.
“Despite the scale of selling seen in gold from funds and ETF redemptions, the metal has found good volumes of over-the- counter physical and investment buying,” said James Moore, an analyst at TheBullionDesk.com in London.
Gold futures for December delivery added $2.90, or 0.3 percent, to $1,174.10 an ounce at 8:03 a.m. on the Comex in New York. Prices are down 1.2 percent this week. The metal for immediate delivery in London was 0.3 percent higher at $1,171.85.
Bullion rose to $1,168 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,162.50 at yesterday’s afternoon fixing. Nine of 22 traders, investors and analysts surveyed by Bloomberg, or 41 percent, said bullion will rise next week. Eight forecast lower prices and five were neutral.
Futures have slumped 7.3 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. Figures yesterday showed European confidence in the economic outlook rose in July to the highest level in more than two years.
SPDR Holdings
“The gold price has recently been under pressure from greater economic confidence and firmer commodity prices, which have taken some of the uncertainty out of financial markets,” said Gavin Wendt, senior resource analyst at MineLife Pty Ltd. “In turn, there has been some selling of gold.”
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,282.28 metric tons yesterday, according to the company’s website. Holdings dropped 18.55 tons on the previous day, the most in more than two years.
The International Monetary Fund’s gold reserves fell by 17.4 tons to 2,933.92 tons in June, according to figures from the Washington-based lender. Russia increased holdings by 6.56 tons to 709.8 tons, the data show.
Silver for September delivery in New York increased 0.3 percent to $17.67 an ounce. Platinum for October delivery was little changed at $1,563 an ounce. Palladium for September delivery gained as much as 0.3 percent to $492.85 an ounce, the highest price in five weeks, and was last down 0.3 percent at $489.85.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
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