Gold Futures Trade Below Two-Week High as Fed to Buying Weighed
London (Nov 20) Gold futures traded little changed below a two-week high as investors weighed expectations for higher U.S. interest rates against signs of more physical buying.
The Bloomberg Dollar Spot Index traded near a five-year high on the outlook for Japan to extend a stimulus program and after minutes of the Federal Reserve’s Oct. 28-29 meeting showed the U.S. moving toward higher interest rates. Higher borrowing costs cut the allure of the metal which generally offers investors returns through rising prices and which is sometimes bought as an inflation hedge.
Switzerland was a net exporter of gold in October for the first time this year and total exports were the highest since February, Swiss Federal Customs Administration data showed today. Most of the shipments were to India, China and Hong Kong. Physical demand increased particularly earlier this month when prices slipped to a four-year low, UBS AG said in a note today.
“There’s good physical demand and we’re shipping a substantial amount to China,” Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva-based refiner, said today by phone. “The outlook is still bearish. Most people are happy to position short,” he said, referring to bets on lower prices.
Gold for December delivery was little changed at $1,192.20 an ounce by 7:14 a.m. on the Comex in New York. Prices, which reached a three-day low yesterday, touched a two-week high of $1,204.10 on Nov. 18. Bullion for immediate delivery rose 0.8 percent to $1,192.44 in London, according to Bloomberg generic pricing.
Trading Volume
Futures trading volume on the Comex was more than double the 100-day average for this time of day, data compiled by Bloomberg show.
Many officials said the Fed should remain attentive to evidence of a possible downward shift in longer-term inflation expectations, according to the minutes released yesterday. The Fed minutes also showed a wide-ranging debate over whether to retain a pledge to keep rates near zero for a “considerable time.”
Forty-seven percent of voters are seen as voting “no” in the Nov. 30 poll on a proposal for Switzerland’s central bank to boost bullion holdings and 15 percent were undecided, according to a gfs.bern poll for Swiss public broadcaster SRF released yesterday. It was conducted Nov. 7 to Nov. 15 and had a margin of error of 2.7 percentage points.
Holdings in gold-backed exchange-traded products fell 1.9 metric tons to 1,616.7 tons yesterday, the lowest since May 2009, data compiled by Bloomberg show.
Silver for delivery in December fell 0.8 percent to $16.17 an ounce in New York. Palladium for delivery the same month lost 0.3 percent to $767.70 an ounce. Platinum for January delivery gained 0.2 percent to $1,201.70 an ounce.
Spource: Bloomberg
