Gold rebounded, paring a weekly loss, as expectations of further stimulus in the U.S. stoked demand for safer assets.
Bullion for immediate delivery rose as much as 0.5 percent to $1,880.03 an ounce after falling as much as 0.9 percent to $1,853.93. It was 0.2 percent higher at $1,873.68 at 3:43 Singapore time. December delivery futures in New York gained as much as 1.4 percent to $1,883.70 an ounce.
Obama called on Congress to pass a jobs plan that would inject $447 billion into the economy through spending on infrastructure, subsidies to local governments to stem teacher layoffs, and cutting in half the payroll taxes paid by workers and small-business owners.
“The plan reflects the government’s deep concern about the economy, raising the real possibility of another round of quantitative easing, which is supportive of gold,” said Duan Shihua, head of corporate services at Haitong Futures Co. and the top-rated gold analyst this year in an annual poll by the Futures Daily and Securities Times. “We’re just getting some book squaring today as investors digest the news, but that just represents to us a good buying opportunity.”
Spot gold, which reached a record $1,921.15 an ounce on Sept. 6, is down 0.5 percent this week. It rebounded from a two- day, 4.4 percent-slump yesterday after Federal Reserve Chairman Ben S. Bernanke held off from offering new measures to spur growth, boosting demand for gold as a store of value.
First-time applications for unemployment benefits rose last week, a sign the labor market is struggling to gain traction. Claims for unemployment benefits rose 2,000 to 414,000 in the week ended Sept. 3, data yesterday showed, adding to signs the U.S. economy is faltering. The median target of economists surveyed by Bloomberg News projected a drop to 405,000.
“Concerns over the health of the European banks are aiding gains in the metal,” said Kunal Shah, head of research at Nirmal Bang Commodities Pvt in Mumbai.
European Central Bank President Jean-Claude Trichet said yesterday “downside risks” to the euro area’s economy have intensified as the region’s debt crisis worsens. The central bank kept interest rates unchanged.
Gold is still in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies, and hedge against inflation.
Bullion may touch $2,000 an ounce by October as concerns over the U.S. and European economic problems persist, Mehul Choksi, chairman of India’s biggest jewelry retailer Gitajali Gems Ltd., said yesterday.
Consumer prices in China climbed 6.2 percent from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 6.2 percent median forecast in a Bloomberg News survey of 31 economists and July’s 6.5 percent gain, which was the highest level in three years.
China’s gold investment demand surged 44 percent in the second quarter from a year ago to 53 metric tons of coins and bars, according to the World Gold Council. That was second- largest after India. Jewelry demand in the country gained 16 percent to 102.9 tons, council data showed.
Platinum for immediate delivery fell 0.2 percent to $1,857.85 an ounce, trading below gold for a fifth time this week. Cash silver rose 0.7 percent to $42.63 an ounce, while palladium rose 0.4 percent to $762 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at email@example.com