Gold Swings as Investors Weigh Stimulus After Home Sales Drop

SINGAPORE (Aug 26)   Gold swung between gains and losses after climbing to the highest level since June as investors weighed the outlook for stimulus in the U.S., with a slump in new-home sales boosting the case for sustained debt-buying.

Bullion for immediate delivery rose as much as 0.7 percent to $1,407.18 an ounce, the highest price since June 7, before trading 0.4 percent lower at $1,392.23 at 8:43 a.m. in Singapore. Gold for December delivery rose as much as 0.8 percent to $1,407 an ounce on the Comex in New York, also the highest since June 7.

U.S. new-home sales fell more than 13 percent in July, data showed Aug. 23, sending gold above $1,400 on speculation the Federal Reserve’s $85 billion a month of asset purchases may be sustained for longer. Minutes released Aug. 21 showed policy makers were comfortable with Chairman Ben S. Bernanke’s plan to taper this year if the economy strengthens. Bullion holdings in the SPDR Gold Trust expanded on Aug. 23 by the most in a year.

“QE is still going to be the driving factor until such time as it’s stopped or until they start tapering off,” said David Lennox, a resource analyst at Fat Prophets in Sydney, referring to quantitative easing by its initials. “It’s going to cause volatility.”

Assets in the largest gold-backed exchange-traded product increased 0.7 percent to 920.13 metric tons, the biggest percentage gain since last August. That helped holdings expand for a second week, the best run since the period to Dec. 7.

Silver for immediate delivery climbed as much as 1 percent to $24.3045 an ounce, the highest since May 6, before trading 0.4 percent lower at $23.989.

Platinum gained as much as 0.7 percent to $1,550.50 an ounce, the highest level since April 9, and was at $1,546. Palladium advanced as much as 0.6 percent to $755.50 an ounce, and was at $754.