Gold Rises for Second Day as Decline to 11-Week Low Spurs Buying

By Glenys Sim

Gold advanced for a second day on speculation that prices near the lowest level since June may encourage purchases as investors assessed tensions in Ukraine and the outlook for higher U.S. borrowing costs.
Bullion for immediate delivery rose as much as 0.3 percent to $1,273.51 an ounce, and traded at $1,272.95 by 11:22 a.m. in Singapore, Bloomberg generic pricing shows. The metal fell to $1,261.35 yesterday, the lowest since June 17, before ending 0.3 percent higher.
Gold has rallied 5.9 percent this year as unrest in the Middle East and Ukraine boosted haven demand. Russian President Vladimir Putin and his
counterpart Petro Poroshenko yesterday agreed on steps to end more than five months of fighting in Ukraine’s eastern regions. Volumes for the benchmark spot contract in Shanghai reached a five-week high on Sept. 1.
“Physical demand in the Far East did help buoy prices,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “Although geopolitical events do not normally drive prices longer term, they may have greater influence on gold in the near term. Bullion prices are likely to stay under pressure, especially if the U.S. dollar gains.”
The Bloomberg Dollar Spot Index traded near the highest level since January before data tomorrow that may show U.S. payrolls rose in August by more than 200,000 for a seventh straight month.

ETP Losses

Gold slumped 28 percent last year on expectations the Fed will reduce stimulus as the economy improves. Minutes of the central bank’s last meeting, when monthly bond buying was cut for a sixth time, signaled that policy makers may increase interest rates sooner than anticipated.
Gold for December delivery climbed 0.3 percent to $1,273.60 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, fell for a third day yesterday in the longest run of losses since May.
Palladium for immediate delivery advanced 0.4 percent to $878.20 an ounce, after prices tumbled yesterday to $869.75, the lowest since Aug. 21. The metal has retreated from a 13-year high of $912.26 on Sept. 1 as concern eased that supplies from Russia, the largest producer, will be disrupted.
Spot silver rose 0.2 percent to $19.2266 an ounce. Platinum added 0.2 percent to $1,415.25 an ounce after prices fell yesterday to a four-month low of $1,403.38.