BLBG: Gold Rebounds From Three-Week Low as Weaker Dollar Spurs Demand
By Nicholas Larkin
Oct. 29 (Bloomberg) -- Gold rose in New York and London, rebounding from a three-week low as a weaker dollar increased the metal’s appeal as an alternative investment and some investors boosted holdings to take advantage of the decline.
The dollar fell for the first day in five against the euro after a report showed the U.S. economy, the world’s biggest, expanded for the first time in more than a year, stoking demand for higher-yielding currencies. Before today, gold futures had dropped 2.5 percent this week. The metal is trading 3.4 percent below a record $1,072 an ounce reached on Oct. 14 in New York.
“The dollar will continue to be the main driver,” Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva, said by phone today. “At this level, some people consider gold cheap. We’re seeing some increased physical demand from Asia.”
December gold futures added $5.10, or 0.5 percent, to $1,035.60 an ounce on the New York Mercantile Exchange’s Comex division by 8:41 a.m. local time, erasing a drop to $1,026.90, matching yesterday’s lowest price since Oct. 6. Immediate- delivery bullion climbed 0.7 percent to $1,035.48 in London.
The metal increased to $1,034 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,031.75 at yesterday’s afternoon fixing. Spot prices are heading for the first weekly decline in five.
‘Safe-Haven Buying’
“We did have a fairly strong selloff overnight,” said Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney. “Probably that’s a short-term bearish move. Certainly there’s some safe-haven buying.”
The metal is up 17 percent this year and heading for a ninth consecutive annual increase. The dollar has declined 5.3 percent in 2009 against the euro, and slipped as much as 0.4 percent today.
“It is important to bear in mind that the rebound in the U.S. currency is still largely seen as temporary and gold is looking bullish,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report.
The U.S. economy expanded at a 3.5 percent annual pace from July through September after shrinking in the previous four quarters. That beat the median estimate of economists surveyed by Bloomberg News.
Barrick Hedges
Barrick Gold Corp., the world’s largest gold producer, said it plans to “completely” eliminate fixed-price forward gold- sales contracts, or hedges, within 12 months. The company said last month it would eliminate hedges as it bests that bullion’s rally will continue.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell for a third day yesterday, losing 1.22 metric tons to 1,104.43 tons, its Web site showed. The fund’s holdings reached a record 1,134 tons on June 1.
Gold imports by India, the world’s biggest buyer, probably fell for a sixth month in October as record prices curbed demand from jewelers, Suresh Hundia, president of the Bombay Bullion Association Ltd., said today. Purchases this month probably fell to 27 tons, from 44 tons year earlier, he said.
Silver for December delivery in New York gained 0.8 percent to $16.365 an ounce. Platinum for January delivery rose 1.5 percent to $1,325.80 an ounce, while palladium for December delivery was 1.5 percent higher at $322 an ounce.
Palladium held in ETF Securities Ltd.’s exchange-traded products rose 0.9 percent to a record 580,283 ounces yesterday, according to the company’s Web site. Silver holdings added 15,197 ounces to an all-time high of 21.414 million ounces, while platinum assets gained 1.6 percent to 396,308 ounces.
