MELBOURNE -- Gold rebounded from the lowest level since July, trimming a third weekly drop that’s been driven by concern the metal’s 12-year bull run is ending as the U.S. recovery takes hold and central bankers weigh reduced stimulus.
Gold for immediate delivery advanced as much as 0.5 % $1,584.30 an ounce, and traded at $1,583.75 at 12:24 p.m. in Singapore. The price slumped to $1,555.55 yesterday, the lowest since July 12, before closing 0.8 % higher. This week, the metal has still declined 1.6 %.
Minutes from the Federal Open Market Committee’s Jan. 29-30 meeting, released on Feb. 20, showed several policy makers said the Fed should be ready to vary the pace of the $85 billion in monthly bond purchases. Holdings in gold-backed exchange-traded products shrank 1.3 % to 2,562.68 metric tons yesterday, the least since Oct. 3, according to data compiled by Bloomberg, while the dollar rallied. Gold has declined 5.5 % in 2013.
“The Fed may have signaled some potential change in their view, but that will be a long time coming,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “Six months ago they certainly weren’t signaling that scenario was on their horizon.”
Gold’s allure as a haven has been eroded on optimism the global economy is strengthening, with data yesterday showing rising sales of U.S. homes and a second monthly gain for an index of leading indicators. Gold fell 3.4 % last week after filings showed billionaire investors including George Soros pared ETP holdings in the final quarter of last year.
‘Chance to Sell’
“This week’s price action supports our view that an inevitable unwind of the 12-year gold bull market has begun,” Ric Deverell and Tom Kendall, analysts at Credit Suisse Group AG, wrote in a report dated yesterday. “A bounce driven by physical demand and/or short-covering over the next few trading sessions is possible but should be viewed as another chance to sell.”
So-called short covering refers to investors ending bets on declines.
Bullion for April delivery gained 0.3 % to $1,582.90 an ounce on the Comex in New York, also paring a third weekly loss. The Dollar Index, a gauge against six counterparts, hit 81.508 yesterday, the highest since Sept. 5, before dropping 0.2 % today. Gold usually trades counter to the U.S. currency.
Platinum for immediate delivery climbed as much as 1 % to $1,631 an ounce and traded at $1,628. Prices are 3.2 % lower this week, the biggest fall since Dec. 21.
Spot silver climbed 0.7 % to $28.8626 an ounce, paring a third weekly drop. Palladium rallied 1 % to $740.40 an ounce, set for a weekly loss. (Bloomberg/msw)
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