Gold Trades Near Three-Month High on U.S. Growth, SPDR Increase

Gold traded near the highest level since March after assets in the SPDR Gold Trust increased and investors weighed the outlook for growth and interest rates in the U.S. before manufacturing data.

Bullion for immediate delivery was at $1,326.66 an ounce at 2:15 p.m. in Singapore from $1,327.33 yesterday, when the metal capped a second quarterly advance, according to Bloomberg generic pricing. Earlier, bullion rose as much as 0.4 percent to $1,332.33, the highest level since March 24.

Gold climbed 10 percent this year as escalating violence in Iraq and tension between Ukraine and Russia boosted demand for haven assets, while the Federal Reserve has said that interest rates will stay low for a “considerable time”. Holdings in the SPDR, the biggest gold-backed exchange-traded product, expanded 0.7 percent yesterday, the largest one-day increase since May 27, according to data compiled by Bloomberg.

“There’s certainly a lot of buying support in the market, particularly out of Asia,” said Gavin Wendt, founder and senior resource analyst at Mine Life Pty in Sydney. “The U.S. says it probably will leave interest rates as they are, they’re not going to do anything in the near term. If interest rates stay low, then that’s good for gold.”

Gold jumped 6.2 percent in June as the dollar dropped, and this year’s rebound has defied bearish predictions from Goldman Sachs Group Inc. and Societe Generale SA that last year’s slump would continue. Bullion’s rally helped gold’s relative strength index climb to 71.3 yesterday, above the level of 70 that signals to some analysts that prices are poised to drop.

SPDR Holdings

Assets in the SPDR expanded to 790.7 metric tons yesterday, the highest since April 29, data show. Bullion for August delivery rose as much as 1 percent to $1,334.90 an ounce on the Comex, the highest for a most-active contract since March 24.

Reports today may show the Institute for Supply Management’s U.S. manufacturing index rose to 55.9 for June from 55.4 in May, while a Markit measure of U.S. factory output may hold at 57.5, according to economists surveyed by Bloomberg.

“If the economic data is positive, then people will deduce that it will give the Fed more room to potentially raise interest rates, which is not so good for gold,” Wendt said.

Silver for immediate delivery added as much as 0.5 percent to $21.1357 an ounce, and traded at $21.0648. Palladium retreated 0.1 percent to $843.15 an ounce, while platinum fell 0.3 percent to $1,481.88 an ounce.

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