Gold Futures Gain as Indian Festival Seen Supportive for Demand

  • Buyers returning ‘little by little’ in India, RBC’s Gero says
  • Gold futures advance for the second time in three sessions

Gold futures gained a second time in three sessions on speculation that demand will accelerate before the Diwali religious festival in India, the world’s second-biggest buyer of the metal.

The coming festival season, when buying gold is popular, has given jewelers in the country a glimmer of hope after prices slipped amid faltering demand. Also supporting prices Tuesday was a report from Goldman Sachs Group Inc. flagging the potential for higher bullion demand in China, the world’s largest buyer, should the yuan extend declines.

Gold futures have dropped more than 3 percent since the end of June as signs of stabilizing growth in China and Europe and prospects for higher U.S. interest rates diminished the metal’s appeal as a haven. The odds of a U.S. rate increase by December are at 74 percent, up from 48 percent three months ago, based on Fed fund futures. Higher rates make gold less competitive against assets that pay interest or offer returns, such as bonds or equities.

“In the last couple weeks, physical demand in India has really grown,” George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. “Little by little, the Indians have come back to the shops to buy.”

For more on Indian gold demand, click here.

Gold futures for December delivery gained 0.8 percent to settle at $1,273.60 an ounce at 1:42 p.m. on the Comex in New York.

Holdings in exchange-traded funds backed by gold rose 0.7 metric ton to 2,042.6 tons on Monday, according to data compiled by Bloomberg.

In other precious metals:

  • Silver futures for December delivery rose 1 percent to $17.78 an ounce on the Comex.
  • On the New York Mercantile Exchange, platinum and palladium climbed.

— With assistance by Jasmine Ng, and Eddie Van Der Walt

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