Gold Swings After Climbing Most in Two Weeks on Stimulus Outlook

Gold swung between gains and losses after rising the most in two weeks yesterday as investors weighed the prospect of the U.S. Federal Reserve maintaining asset purchases. Outflows from investor holdings slowed.

Spot gold traded at $1,407.50 an ounce at 3:01 p.m. in Singapore, after climbing and dropping at least 0.3 percent. Prices jumped 1.7 percent yesterday, the most since May 20, as U.S. manufacturing unexpectedly contracted in May. Cash silver declined 0.5 percent to $22.62 an ounce.

Gold fell 16 percent this year after a 12-year bull run as investors sold the metal from exchange-traded products at a record pace on speculation the Fed may taper quantitative easing. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, were unchanged for a third day yesterday after expanding on May 29 for the first time in almost three weeks, according to data on the company’s website.

“Gold advanced on speculation that the Federal Reserve will continue to provide monetary stimulus,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia (CBA), wrote in an e-mail. Commodities were supported “as the dollar weakened after an unexpected contraction in the U.S. manufacturing sector.”

Bullion for August delivery slid 0.3 percent to $1,407.40 an ounce on the Comex in New York. Prices rose 1.4 percent yesterday as the Dollar Index, a gauge against six counterparts, slumped 0.9 percent after a report showed the Institute for Supply Management’s factory index fell to 49, the lowest reading since June 2009. This compares with April’s 50.7 and economists’ median estimate for 51.

Platinum slipped 0.4 percent to $1,490.30 an ounce after surging as much as 3.2 percent yesterday to the highest level since May 15. A local union official was killed and a second wounded in a shooting near Lonmin Plc (LMI)’s Marikana mine in South Africa, where labor disputes last year disrupted supplies. Palladium fell 0.2 percent to $756.05 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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