Gold Holds Below Three-Week High as Stimulus Assessed With Rates

Gold traded below the highest level in three weeks as investors weighed expectations for higher borrowing costs in the U.S. against global stimulus undertaken to spur economic growth. Platinum advanced.

Bullion for immediate delivery traded at $1,197.89 an ounce by 3:24 p.m. in Singapore from $1,197.14 yesterday, according to Bloomberg generic pricing. The metal climbed on Nov. 21 to $1,207.93, the highest since Oct. 30, as China joined Japan and Europe in taking steps to boost growth.

Gold is on course for the first back-to-back annual drop since 2000 as the Federal Reserve moves toward raising interest rates, while other central banks add to monetary easing. China last week cut interest rates for the first time since 2012 after the Bank of Japan boosted its unprecedented stimulus last month. Since June, the European Central Bank has cut rates, offered long-term loans to banks and bought covered bonds and asset-backed securities.

“Differences in economic fundamentals in the U.S., Europe, Japan and China have led to policy divergence, a situation we see continuing in the medium term,” Yang Xi, a Hangzhou, China-based analyst at Yongan Futures Co., wrote in a note. “While ongoing stimulus will give precious metals some support, the strength of the dollar will limit any rallies.”

The Bloomberg Dollar Spot Index traded near a five-year high before the release of U.S. data on home prices and consumer confidence today.

U.S. Inflation

Gold for February delivery traded at $1,198.30 an ounce on the Comex in New York from $1,196.60 yesterday. Most-active futures fell 0.2 percent yesterday as Richard Fisher, president of the Fed Bank of Dallas, said he is not concerned about U.S. inflation, according to an interview in the Financial Times.

Silver for immediate delivery increased 0.3 percent to $16.5340 an ounce, rising for a fourth day in the longest run since June. Spot platinum climbed 0.5 percent to $1,210.12 an ounce after dropping 1.9 percent yesterday. Palladium was little changed at $791.55 an ounce.

Platinum and palladium supply probably will fall short of demand for a fourth year in 2015 as more usage in vehicles helps compensate for rebounding South African mine output, according to Johnson Matthey Plc.

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