Gold Climbs As Lowest Price Since September Spurs Demand

Melbourne-Australia (Mar 21)  Gold advanced on speculation that the largest weekly loss since September would spur physical demand even after the Federal Reserve said interest rates may increase and as Goldman Sachs Group Inc. predicts declines.

Bullion for immediate delivery gained as much as 0.6 percent to $1,335.63 an ounce and was at $1,331.13 by 3:03 p.m. in Singapore. Prices are set to drop 3.8 percent this week, the first such loss since the period ended Jan. 31 and biggest decline since Sept. 13. Gold for June delivery rose 0.1 percent to $1,332.20 an ounce on the Comex in New York.

Fed Chair Janet Yellen said this week that interest rates could rise “around six months” after asset purchases end, most likely in the fall. Policy makers cut monthly bond-buying by $10 billion at the conclusion of their two-day meeting, leaving purchases at $55 billion. Prices reached a six-month high on March 17 as turmoil over Ukraine left Russia and the West embroiled in their worst confrontation since the Cold War.

“The risk premiums have been taken out of it,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin in Sydney. “We buy gold as means for a hedge against something, as a store of value. When that evaporates from the market then it really only comes down to the physical buying mentality of people that will put a floor in place.”

Gold held in exchange-traded products rose for a third day yesterday to 1,764.02 metric tons, data compiled by Bloomberg show. Assets in the SPDR Gold Trust, the biggest gold-backed ETP, were unchanged at 812.78 tons yesterday, according to data on the fund’s website.

China Discount

In China, the largest consumer, volumes for the benchmark spot contract in Shanghai rose to a three-week high on March 19. The metal of 99.99 percent purity for immediate delivery traded $4.70 an ounce below the London price today. Gold’s recent rally was based on cold weather in the U.S., China credit concerns and geopolitical tensions, Jeffrey Currie, Goldman’s head of commodities research, said in a report.

“While further escalation in tensions could support prices, we expect acceleration in U.S. growth will bring gold prices lower,” he said.

Silver for immediate delivery added 0.4 percent to $20.3378 an ounce, trimming this week’s 5 percent decline, the biggest loss since September. Platinum advanced 0.5 percent to $1,438.50 an ounce, set to drop 2.1 percent this week. Palladium rose 0.4 percent to $773.20 an ounce.

Source: business.bisnis