Gold Swings Near Four-Month Low as Investors Weigh Fed Tapering
London (Nov 22) Gold swung between gains and losses near a four-month low in London as investors weighed signals from the U.S. Federal Reserve that it may cut stimulus and amid little physical demand.
Bullion fell to $1,236.88 an ounce yesterday, the lowest since July 9. The Bloomberg U.S. Dollar Index, a measure against 10 major currencies, was little changed near the highest level in more than a week. Marex Spectron Group said in a report today it’s seeing physical gold demand “only in small pieces.”
Gold is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. Data showed this week that U.S. jobless claims fell more than forecast after minutes from the Fed’s last meeting reported that policy makers expected further improvement in the labor market to warrant trimming the pace of purchases in the coming months.
“Hawkish Federal Open Market Committee minutes were damaging, hinting at a sooner-than-expected start to trimming the Fed’s bond buying,” Jim Pogoda, a trading consultant at Gold Bullion International in New York, wrote in an e-mail yesterday. “Unless significant bargain hunters/stronger physical demand emerge, I think we’ll see a drift down.”
Gold for immediate delivery added 0.2 percent to $1,244.98 by 9:24 a.m. in London. Prices that fell as much as 0.1 percent and rose as much as 0.3 percent are down 3.5 percent this week, the most since Sept. 13. Bullion for December delivery was little changed at $1,243.80 on the Comex in New York.
Futures trading volume was 24 percent below average for the past 100 days for this time of day, data compiled by Bloomberg showed. CME Group Inc. reduced the margin requirements on gold trading, cutting the minimum cash deposit for speculators 9.4 percent to $7,975 per 100-ounce contract at the close of trading today.
ETP Holdings
Holdings in gold-backed exchange-traded products fell 5 metric tons to 1,858 tons yesterday, the lowest since April 2010, data compiled by Bloomberg show.
Billionaire hedge-fund manager John Paulson, the largest holder in the SPDR Gold Trust, the biggest gold ETP, told clients this week that he wouldn’t personally invest more money in his gold fund because it isn’t clear when inflation will accelerate, according to a person familiar with the matter.
Silver for immediate delivery was little changed at $19.982 an ounce in London, after reaching $19.7342 yesterday, the lowest since Aug. 8. Palladium rose 0.8 percent to $719.28 an ounce. Platinum gained 0.4 percent to $1,397.50 an ounce. Prices fell to $1,388.54 yesterday, the lowest since Oct. 16.
Eskom Holdings SOC Ltd. said South Africa’s power system will remain constrained next week even as the utility lifted emergency restrictions that have curbed supplies to its biggest industrial clients. South Africa accounts for 72 percent of platinum mine supply and 36 percent of palladium output, according to Barclays Plc.
