Gold Swings Near 2-Week Low as Investors Weigh Stimulus, Dollar

Gold swung between gains and losses near a two-week low in London as investors weighed speculation the U.S. Federal Reserve will curb stimulus against a weakening dollar.

Data released last week showed U.S. payrolls increased more than forecast in May, and Fed Chairman Ben S. Bernanke said last month that the central bank could curtail its $85 billion monthly bond purchases if the economy improves. The dollar was little changed against six major currencies after falling to the lowest level since Feb. 21 yesterday.

“There’s a tug of war between investors putting money into gold and taking it out,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “One of the concerns that investors are worried about is if there’s no more quantitative easing. We’ve seen some scattered buying on the back of the weak dollar.”

Gold for immediate delivery was little changed at $1,377.18 an ounce by 9:37 a.m. in London. Prices rose as much as 0.1 percent and fell as much as 0.3 percent after reaching $1,366.19 yesterday, the lowest level since May 23. Bullion for August delivery was unchanged at $1,377 on the Comex in New York. Futures trading volume was 51 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.

Gold Prices

Prices slid 18 percent this year as an improving U.S. economy increased speculation the Fed may taper quantitative-easing measures that helped bullion cap a 12-year bull run in 2012. The Bank of Japan yesterday refrained from adding stimulus or expanding its toolkit for tackling volatility in bonds. Newcrest Mining Ltd. (NCM), Australia’s largest gold producer, said last week it will write down the value of its assets by as much as A$6 billion ($5.7 billion) after the slump in prices.

Gold will continue to decline over the medium-term on a re-acceleration in U.S. growth and a further unwinding of exchange-traded fund positions, Goldman Sachs Group Inc. said in a report today. The bank sees the metal trading at $1,345 in 12 months.

Holdings in exchange-traded products fell 2.3 metric tons to 2,127.5 tons yesterday, the lowest since April 2011, according to data compiled by Bloomberg.

Silver for immediate delivery rose 0.6 percent to $21.8035 an ounce in London. Platinum added 0.2 percent to $1,482.53 an ounce. Palladium was down 0.3 percent at $751.25 an ounce.

To contact the reporter for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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