Gold Advances in New York as Physical Demand Picks Up

Gold futures climbed to the highest in a week on demand for bars and gold coins following the biggest price slump in three decades, while Japan plans to push ahead on stimulus measures.

The volume for the Shanghai Gold Exchange’s benchmark cash contract today exceeded 43,000 kilograms (43 metric tons) for the first time, according to data on the bourse’s website. The U.S. Mint has sold 167,500 ounces of gold coins in April, compared with 62,000 ounces in all of March, data on the Mint’s website showed. Bank of Japan Governor Haruhiko Kuroda said today he would go ahead with the campaign to defeat deflation after the G-20 offered no opposition to the monetary stimulus policies.

“Strong demand for physical gold is a major factor working to lift gold prices up from last week’s lows and beginning to suggest a market bottom is in place,” Jim Wyckoff, a senior analyst at Kitco Inc., a precious-metal refiner and research company in Montreal, said in a report. “Continuation of easing measures would also be a positive for the raw-commodity sector, including precious metals.”

Gold futures for June delivery rose 1.8 percent to settle at $1,421.20 an ounce at 1:38 p.m. on the Comex in New York, after advancing to $1,438.80, the highest since April 15.

Bullion slumped 9.3 percent on April 15, the biggest drop since 1980 and plunged 7 percent last week. Prices fell 17 percent in 2013 through April 19 after rising sixfold in a 12-year rally through last year.

“Physical demand from China has been very strong since the price decline,” Barclays Plc analysts Suki Cooper, Lynnden Branigan and Christopher Louney wrote in a report today, adding that Indian demand and U.S. coin sales have surged. “Retail investors have viewed the price dip as a buying opportunity.”

Physical Gold

Fund managers and other speculators increased net-long positions in gold by 9.8 percent to 61,579 futures and options in the week ended April 16, U.S. Commodity Futures Trading Commission data show. Bullion held in exchange-traded products decreased for a 14th day to 2,340.618 metric tons on April 19, the least since November 2011.

The Chinese Gold & Silver Exchange Society in Hong Kong, a century-old bullion bourse, has almost run out of physical gold and most of its members are short of the metal, according to exchange President Haywood Cheung. Deliveries from Switzerland and London will arrive in Hong Kong around April 24, Cheung said in a Bloomberg Television interview on April 19.

In India, gold imports may jump by 36 percent in the three months through June compared with a year earlier, as consumers rush to buy jewelry and coins after prices slumped, the Bombay Bullion Association Ltd. said April 18. India and China are the world’s biggest consumers of gold.

Futures Volume

Silver futures for July delivery advanced 1.6 percent to $23.374 an ounce, rising for the first time in four sessions. Volume on the Comex was 30 percent above the average in the past 100 days for this time of the day, data compiled by Bloomberg show.

On the New York Mercantile Exchange, platinum futures for July delivery climbed 0.9 percent to $1,436.80 an ounce. Prices dropped 4.8 percent last week, the most since December 2011.

Palladium futures for June delivery added 0.7 percent to $681.90 an ounce, rising for the third straight session.

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