Gold Near Two-Month High as Stocks Drop, ETPs Stabilize
SAN FRANCISCO (Aug 16) Gold headed for the largest weekly gain in more than a month as physical demand increased. Silver rose, poised for the biggest weekly increase since 2008, after entering a bull market yesterday.
Physical demand for gold has not slowed even as prices rallied, Standard Bank Plc said in a report today. Thirteen analysts surveyed by Bloomberg expect the metal to rise next week, four were bearish and five neutral, the highest proportion of bulls since March 8. Consumer buying jumped 53 percent in the second quarter from a year earlier, almost making up for the record sales of exchange-traded products backed by bullion, World Gold Council data show.
The rally that we are seeing is being supported by the buoyant physical demand,” Sterling Smith, a Chicago-based commodity futures specialist at Citigroup Inc., said in a telephone interview. “The mood is definitely bullish.”
Gold futures for December delivery added 0.5 percent to $1,367.90 an ounce at 11:42 a.m. on the Comex in New York. A close at that price would be a weekly gain of 4.2 percent, the biggest since July 12.
Demand in India and labor concerns in South Africa may boost prices in the next four to five weeks before an industry conference in Denver, JPMorgan Chase & Co. said in a report dated yesterday.
‘Technical Buying’
“The break above $1,350 prompted a short-covering rally,” Smith said. “We saw a lot of technical buying.”
Through yesterday, gold fell 19 percent this year as some investors lost faith in the metal as a store of value, wiping $56.1 billion from the value of bullion-backed ETPs. Filings showed this week billionaire John Paulson cut his stake in the SPDR Gold Trust, the biggest-bullion ETP, by 53 percent in the second quarter.
Silver futures for December delivery climbed 1.1 percent to $23.24 an ounce in New York, after reaching $23.34, the highest since May 15. Prices are up 14 percent this week, the most since September 2008. Prices yesterday closed 24 percent higher than a 34-month closing low on June 27, sending the metal into a bull market.
Holdings in exchange-traded funds backed by silver rose to a record 19,892.1 metric tons yesterday and are up 5.2 percent this year.
