Gold rose from the lowest since 2010 on speculation that the slump may spur purchases. The metal had its worst week since April after Federal Reserve Chairman Ben S. Bernanke said the bank may curb its stimulus.
Prices slid 6.4 percent yesterday, a day after Bernanke said the central bank may start reducing $85 billion in monthly debt buying this year and end the program in 2014. The metal touched $1,268.70 an ounce earlier today, the cheapest since Sept. 16, 2010. Physical demand was “again aggressive yesterday, and overnight, in Europe,” according to Kitco Metals Inc. a precious-metal refiner and research company in Montreal.
Bullion has fallen 23 percent this year, heading for the biggest annual drop since 1981, as some investors lose faith in it as a store of value and speculation grew that the Fed will taper debt-buying that helped fuel a 12-year bull run through last year.
“There’s always physical demand that might come in a bit stronger, considering the move we had,” Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said by telephone. “I don’t think we’ll get back to where we were anytime soon. The gold market is getting used to the idea that liquidity won’t be as forthcoming anymore.”
Gold futures for August delivery added 0.5 percent to settle at $1,292 at 1:49 p.m. on the Comex in New York. Prices tumbled 6.9 percent this week.
CME Group Inc., owner of the Comex, increased the exchange’s margin requirements for gold, making it more expensive for speculators to trade. CME said yesterday the minimum cash deposit for futures will rise 25 percent to $8,800 per 100-ounce contract at today’s close.
“The trend has been and will continue to be lower until the central banks of the world extricate themselves from the forefront of market thought,” Carlos Perez-Santalla, a broker at Marex North America LLC, said in an e-mailed report. “Gold will remain under pressure.”
Bullion entered a bear market in April, extending the retreat from its all-time high of $1,923.70 in September 2011. Global holdings in exchange-traded products fell 5.1 metric tons to 2,106.1 tons yesterday, the lowest since March 2011, data compiled by Bloomberg show.
“The worst of the current round of decline is probably behind us, as gold prices may stabilize and rebound,” Jeffrey Christian, managing partner at CPM, said in an interview in Zhaoyuan, China, today. “It’s going to be very important to see in the next few days how enthusiastic investors are. If they signal they are waiting for still lower prices, that will be very negative.”
The slump in gold prices triggered a drop in related equities. Newcrest Mining Ltd., Australia’s biggest producer, slid 3.7 percent in Sydney, taking this year’s loss to 53 percent. It said this month it will write down the value of its assets by as much as A$6 billion ($5.5 billion) after prices slid.
The Standard & Poor’s GSCI gauge of 24 commodities dropped 5.6 percent since the end of December, the MSCI All-Country World Index of equities rose 3.4 percent and the U.S. Dollar Index added 3.2 percent. A Bank of America Corp. index shows Treasuries lost 2.4 percent.
Silver futures for July delivery gained 0.7 percent to $19.959 an ounce in New York, after falling to $19.31, the lowest since August 2010. It retreated 9.1 percent this week, the biggest drop since April. An ounce of gold bought as much as 65.55 ounces of silver in London, the most since August 2010.
On the New York Mercantile Exchange, platinum futures for July delivery climbed 0.4 percent to $1,369.50 an ounce, narrowing the weekly loss to 5.4 percent. Trading volume was 87 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Palladium futures for September delivery rose 1.5 percent to $674.75 an ounce, ending a four-session decline.