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Gold Borrowing Costs Remain Near 4 1/2-Year High on Tight Supply

The cost of borrowing gold held near a 4 1/2-year high in London as U.S. futures moved into backwardation this month, a signal that near-term supplies are tightening at a time when prices gained on more physical demand.

The one-month gold forward offered rate, which shows the interest rate at which dealers will lend metal for dollars, has been negative since July 8, pushing one-month lease rates to 0.3067 percent on Aug. 8, the highest since December 2008. The cost of borrowing was at 0.2929 percent today, data compiled by Bloomberg showed. August futures on the Comex in New York rose above the December contract for the first time on Aug. 2.