Gold Pares Weekly Decline as Contraction in ETP Holdings Pauses

Gold advanced after global investment holdings halted a more-than-five-week slide even as U.S. jobs data added to signs of a recovery. Platinum and palladium headed for a third week of gains.

Spot gold rose as much as 0.3 percent to $1,461.93 an ounce, overturning a loss of 0.4 percent. Bullion traded at $1,460.30 at 2:30 p.m. in Singapore. The price, which lost 0.7 percent this week, has rebounded from $1,321.95 on April 16, the lowest level since January 2011.

Assets in exchange-traded products gained 0.1 percent to 2,241.708 metric tons yesterday, the first increase since April 1, according to data tracked by Bloomberg. Holdings in the SPDR Gold Trust, the biggest gold-backed ETP, expanded for the first time since March 19. Global ETP assets have still declined 15 percent this year as gold tumbled into a bear market last month.

“Gold’s had a good run after prices collapsed and is consolidating in this $1,400-$1,480 region,” said Yang Shandan, a senior trader at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “The market needs both retail and investment demand to come in strongly for prices to move back above $1,500.”

U.S. jobless claims fell to pre-recession levels, data showed yesterday, helping drive gold 1.1 percent lower amid concern that haven demand will ebb as recovery takes hold. Bullion traders and analysts are divided on the outlook, with 12 people surveyed by Bloomberg expecting prices to advance next week, while 10 forecast a drop and five were neutral.

Biggest Holder

Billionaire John Paulson is the biggest holder in the SPDR, and Paulson & Co.’s Gold Fund lost 27 percent in April, bringing the drop this year to 47 percent, according to two people familiar with the matter. Paulson is standing by gold, saying it is the best protection against currency debasement and inflation.

“Individual investors through the ETF market can actually get in and buy gold, and people can now invest in physical gold, which was very difficult to do many years ago,” Robert Kapito, president of Blackrock Inc., said on Bloomberg Television’s “Surveillance” with Tom Keene and Sara Eisen. Blackrock is the world’s biggest money manager.

Gold for June delivery fell 0.7 percent to $1,458.80 an ounce on the Comex. Silver gained 0.3 percent to $23.806 an ounce, set for a weekly drop. Platinum rose 0.3 percent to $1,511.50 an ounce, while palladium was little changed at $709.65 an ounce.

Palladium’s deficit rose to the biggest in 11 years in 2012 as strike action in South African mines curbed supply and demand expanded, Thomson Reuters GFMS said on May 2. Platinum slipped into a shortage for the first time since 2004.

A South African labor union locked in a battle for dominance at local mines plans to hold separate wage talks on May 13 and 14 with Lonmin Plc and Impala Platinum Holdings Ltd. instead of mediating with the Chamber of Mines industry body.

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