Gold Rises as Silver Caps Biggest Weekly Gain Since 2008

Gold rose to the highest in almost two months and silver capped the biggest weekly rally since 2008 on signs of higher physical demand for precious metals.

Global bar and coin purchases reached a record last quarter and jewelry usage rose to the most since 2008, World Gold Council figures showed this week. Thirteen analysts surveyed by Bloomberg expect the metal to rise next week, four were bearish and five neutral, the highest proportion of bulls since March 8. Holdings in exchange-traded products backed by silver reached an all-time high yesterday, data compiled by Bloomberg show.

Purchases for gold and silver are climbing as lower prices attract consumers after both metals fell into bear markets in April. Gold has rebounded 16 percent since reaching the cheapest in 34 months in June, while silver yesterday entered a bull market, settling 24 percent above its bear-market low. Sales of American Eagle silver coins by the U.S. Mint were 31 million ounces so far this year, compared with 33.7 million ounces sold in all of 2012, data on the website show.

“The rally that we are seeing is being supported by the buoyant physical demand,” Sterling Smith, a Chicago-based commodity futures specialist at Citigroup Inc., said in a telephone interview. “The mood is definitely bullish.”

Gold futures for December delivery added 0.7 percent to settle at $1,371 an ounce at 1:48 p.m. on the Comex in New York. Prices reached $1,379.20 after the close of regular trading, the highest since June 18. The precious metal gained 4.5 percent this week, the most since July 12.

JPMorgan Outlook

Demand in India and labor concerns in South Africa may boost prices in the next four to five weeks before an industry conference in Denver, JPMorgan Chase & Co. said in a report dated yesterday.

Futures have fallen 18 percent this year as some investors lost faith in the metal as a store of value. Holdings in gold ETPs are down 26 percent hits year, wiping $55.5 billion from the value of the assets. Last quarter, billionaire John Paulson cut his stake in the SPDR Gold Trust, the biggest-bullion ETP, by 53 percent, a government filing showed this week.

Silver futures for December delivery climbed 1.7 percent to $23.372 an ounce in New York, capping a gain of 15 percent this week, the most since September 2008. Prices touched $23.445 after the settlement, the highest since May 15.

On the New York Mercantile Exchange, platinum futures for October delivery fell 0.3 percent to $1,527.60 an ounce. The price has dropped 1 percent this year.

Palladium futures for September delivery rose 0.8 percent to $763.05 an ounce, extending the year’s gain to 8.5 percent.

(For more on the gold bear market, see EXT5.)
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