Gold Rises as Jewelry Sales Jump, Investor Demand Climbs

Gold futures climbed and the spot price headed for the longest rally in four weeks on signs that demand is rebounding among consumers and investors.

The China Gold Association said that retail sales soared on April 15 and April 16, and the All India Gems & Jewellery Trade Federation said that demand climbed to the highest this year. Futures gained as manufacturing in the Philadelphia region expanded in April at a slower pace than projected. The metal has slumped this year partly because of a recovering global economy.

“Physical demand continues to remain strong,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview. “Some investors are buying gold as economic numbers have been a disappointment.”

On the Comex in New York, gold futures for June delivery rose 0.7 percent to settle at $1,392.50 an ounce at 1:52 p.m. On April 16, the metal touched $1,321.50, the lowest since January 2011. India is the biggest buyer, following by China.

Gold for immediate delivery advanced 0.8 percent to $1,387.90 at 3:01 p.m. The price headed for the third straight gain, the longest rally since March 19.

The Federal Reserve, which buys $85 billion of securities a month to bolster the economy, said in its Beige Book business survey yesterday that the U.S. expansion remained moderate. European car sales are heading to a 20-year low.

‘Macro Sentiment’

“Due to the latest turn to bearish macro sentiment, a further fall in gold has been prevented for now,” Bjarne Schieldrop, the Oslo-based head of commodity research at SEB AB, said in an e-mail. A surge in physical demand is “positive for gold and supportive,” he said.

Futures trading of 232,170 contracts was 36 percent higher than the average for the past 100 days for this time, according to data compiled by Bloomberg. Volume soared to a record 751,058 on April 16 as the price plunged 9.3 percent, the most in 33 years.

Gold slumped into a bear market on April 12, partly on concern that Cyprus may lead other European states in selling the metal from reserves, according to Goldman Sachs Group Inc. The price has slumped 17 percent in 2013 following a 12-year rally.

Holdings in exchange-traded products backed by gold have dropped 10 percent this year, according to data compiled by Bloomberg. Assets in the SPDR Gold Trust, the biggest ETP, are at the lowest in three years.

There is the potential for a further decline in ETP holdings, Goldman Sachs said in a report dated yesterday. About 11 percent of the current assets were bought at or above current prices, Goldman said.

Silver futures for May delivery dropped 0.3 percent to $23.245 an ounce on the Comex. The price headed for the biggest weekly slump since September 2011.

On the New York Mercantile Exchange, platinum futures for July delivery fell 0.4 percent to $1,429 an ounce.

Palladium futures for June delivery rose 1.3 percent to $669.80 an ounce.