Gold Nears 2-Month High as Traders Weigh Stimulus Against Demand

Gold was little changed near a two-month high in New York as investors weighed expectations the U.S. Federal Reserve will reduce stimulus against more physical demand. Platinum reached a four-month high.

Bullion futures rose to a two-month high of $1,384.10 an ounce on Aug. 19 and are up 0.1 percent this week. Minutes released Aug. 21 of the Fed’s July 30-31 meeting showed policy makers were “broadly comfortable” in slowing debt buying if the economy strengthens.

Gold slid 18 percent this year as some investors lost faith in the metal as a store of value. The Fed will reduce its monthly purchases of $85 billion in bonds at its next meeting on Sept. 17-18, according to 65 percent economists in an Aug. 9-13 Bloomberg survey. The median estimate is a cut to $75 billion each month. Bullion futures rebounded from a 34-month low of $1,179.40 set in June as lower prices boosted demand for jewelry, coins and bars, particularly in Asia.

“The Fed minutes have increased expectations that stimulus will be scaled back and that has certainly weighed on gold,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “Gold remains well-bid in Asia, which should support prices.”

Gold for December delivery added 0.1 percent to $1,372.70 an ounce by 7:47 a.m. on the Comex in New York. Futures trading volume was 48 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery in London lost 0.2 percent to $1,373.30.

ETP Holdings

Gold exchange-traded product holdings fell 1 metric ton to 1,947.3 tons yesterday, data compiled by Bloomberg show. Assets, which are down 26 percent this year, reached a record in December as central-bank stimulus increased investors’ concern about currency debasement and accelerating inflation.

“The U.S. labor market remains the key element to the quantitative-easing tapering future,” Andrey Kryuchenkov, a commodity strategist in London at VTB Capital, wrote in a report. “Until we have some clarity on this issue, there is set to be jittery and nervous gold trading.”

Silver for December delivery added 0.1 percent to $23.10 an ounce in New York. Palladium for September delivery fell 0.4 percent to $752.35 an ounce.

Platinum for October delivery reached $1,546.90 an ounce, the highest since April 10, and was last up 0.1 percent at $1,542.30. It’s set for a fourth straight weekly gain, the best run since January. Demand for the metal will outpace supply for a second year in 2013, partly as labor strikes and rising mining costs in top producer South Africa curb output, according to Barclays Plc.

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