Gold Advances for Second Day on Rising Turkey, Russia Tensions

  • Intensified geopolitical risks lift prices, OCBC's Gan says
  • Holdings in exchange-traded products decline for fifth day

Gold climbed for a second day on rising political tensions after Turkey said it had downed a Russian fighter jet, spurring demand for haven assets.

Bullion for immediate delivery rose as much as 0.5 percent to $1,080.95 an ounce and traded at $1,079.83 at 3:58 p.m. in Singapore, according to Bloomberg generic pricing. The metal -- which is rebounding from $1,064.55 on Nov. 18, the lowest since February 2010 -- gained 0.6 percent on Tuesday.

Russian President Vladimir Putin said the shooting down of the plane by Turkish forces near their border with northeastern Syria would have “serious consequences.” Gold touched a five-year low last week as traders increased wagers U.S. policy makers will raise borrowing costs next month. The chances of a December liftoff are now at 74 percent compared with 50 percent at the end of October, Fed-fund futures data show.

“Intensified geopolitical tensions should give gold prices a lift,” said Barnabas Gan, an economist at Overseas-Chinese Banking Corp. in Singapore, who was the most accurate forecaster in the third quarter, according to Bloomberg rankings. “We remain firm on our forecast for gold to touch $1,050 at year-end, which is underpinned by our call for the Fed to engage its rate hike in December.” 

Holdings in gold-backed exchange traded products fell for a fifth day to 1,494.28 metric tons on Tuesday, data compiled by Bloomberg show. Assets are at the lowest since February 2009.

Bullion of 99.99 percent purity increased 0.6 percent to 222.84 yuan a gram on the Shanghai Gold Exchange. Spot silver rose 0.2 percent, while platinum was up 0.3 percent at $844.75 an ounce, after dropping to $835.96 an ounce on Tuesday, the lowest level since December 2008.

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