Gold Holds Near Two-Week High as Palladium ETPs Expand to Record

San Francisco (June 12)   Gold held near the highest level in two weeks as a rally in equities faltered, boosting demand for alternative investments. Assets in palladium-backed exchange-traded products expanded to a record.

Gold for immediate delivery traded at $1,260.35 an ounce by 9:26 a.m. in Singapore from $1,261.07 yesterday, according to Bloomberg generic pricing. The metal yesterday climbed to $1,265.32, the highest level since May 28, as the Dow Jones Industrial Average halted a five-day advance after the World Bank cut its forecast for global growth.

The Washington-based lender said in a June 10 report that the world economy will expand 2.8 percent this year, compared with a January projection of 3.2 percent, amid slower growth in the U.S., China and Russia. In China, the largest gold consumer, volumes for the benchmark spot contract in Shanghai rose to a two-week high of 15,176 kilograms yesterday.

“While gold has seen a bit of bounce, the outlook for prices remains negative as U.S. economic data continues to improve, supporting strength in the stock markets and tapering” by the Federal Reserve, said Sarah Xie, a research analyst at Hong Kong-based Wing Fung Financial Group Ltd.

Bullion sank 28 percent in 2013 to end a 12-year bull run on speculation the Fed will trim asset purchases used to fuel growth as the economy recovers. Data today may show U.S. retail sales rose in May. The central bank has made four cuts since January and next meets June 17-18.

Gold for August delivery traded at $1,260.40 an ounce on the Comex in New York from $1,261.20 yesterday.

Palladium for immediate delivery retreated 0.2 percent to $859.25 an ounce after advancing to $864 yesterday, the highest level since February 2001. Holdings in ETPs backed by the metal rose to an all-time high of 91.93 metric tons yesterday, according to data compiled by Bloomberg.

Platinum lost 0.6 percent to $1,474.19 an ounce after climbing to $1,487 yesterday, the highest level since May 23. The union on strike at the world’s biggest platinum producers in South Africa, which ranks second in palladium production, is consulting its members after the latest effort to break the four-month deadlock ended in failure and without any plans for further negotiations.

Silver fell 0.1 percent to $19.1818 an ounce.

Source:  Bloomberg