Gold Holds Near Highest in a Week as Investors Weigh Stimulus
LONDON (Oct 21) Gold held near the highest in more than a week in London as investors weighed speculation the Federal Reserve will delay slowing stimulus. Palladium reached a seven-week high.
Gold surged 3.5 percent last week, the most in two months, as the dollar weakened on speculation that the Fed won’t start tapering until 2014. The Fed will delay cutting its bond buying until March, according to the median estimate of 40 economists in an Oct. 17-18 Bloomberg survey. A poll last month forecast the first reduction would be in December.
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Fed will slow debt purchases. Policy makers unexpectedly refrained from reducing purchases last month. The Labor Department will release September employment data tomorrow, after postponing the report from Oct. 4 because of the partial government shutdown that ended last week.
“The debacle of the last couple of weeks in the U.S. will have pushed the ‘recovery’ back a bit and as such, most participants doubt that the Fed will want to begin tapering this year,” David Govett, head of precious metals at Marex Spectron Group in London, wrote today in a report. “This should keep a level of support in the precious metals markets.”
Gold for immediate delivery added 0.1 percent to $1,318.17 an ounce by 9:46 a.m. in London. It reached $1,328.40 on Oct. 18, the highest since Oct. 8. Bullion for December delivery rose 0.2 percent to $1,317.20 an ounce on the Comex in New York. Futures trading volume was 38 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Gold holdings in exchange-traded products fell 2.1 metric tons to 1,894.1 tons on Oct. 18, the lowest since April 2010, data compiled by Bloomberg show. Investors sold more gold futures in the two weeks prior to last week’s U.S. budget resolution than in any two-week period since the start of 2011, Morgan Stanley said in a report today.
The Bloomberg U.S. Dollar Index, a measure against 10 major currencies, was little changed after sliding to the lowest since February on Oct. 18. U.S. employers added 180,000 workers in September, the most since April and up from 169,000 in August, according to economists surveyed by Bloomberg News, indicating the economy was gaining momentum before the shutdown.
“Gold will now likely turn to U.S. labor and economic data, which are key indicators for the Fed in its decision to begin tapering stimulus,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today.
Silver for immediate delivery rose 1.1 percent to $22.162 an ounce in London, after reaching $22.284, the highest since Oct. 9. Palladium reached $747.35 an ounce, the highest since Aug. 28, and was last up 0.6 percent at $745.10. Platinum added 0.1 percent to $1,439.95 an ounce. It reached $1,445.60, the highest since Sept. 20.
