Gold Climbs for Third Day to Extend Rebound From 34-Month Low

Bloomberg, (2/7) -- Gold extended a rebound from a 34-month low, gaining for a third day, on speculation that lower prices will raise demand even as holdings in the largest bullion-backed exchange-traded product resumed a decline. Spot bullion rose as much as 0.5 percent to $1,259.17 an ounce and was at $1,254.38 at 10:06 a.m. in Singapore. Prices fell to $1,180.50 on June 28, the lowest since August 2010, before rising 2.8 percent that day and 1.5 percent yesterday. Benchmark contract volumes on the Shanghai Gold Exchange in the past week were more than three times last year’s daily average. Gold plunged 23 percent in the second quarter as investors speculated that the U.S. Federal Reserve will scale back monetary stimulus. Newsletter writer Dennis Gartman said yesterday that he’s very bullish on gold after the slump as central banks continue to inject money. There’s “strong” physical demand with bullion below $1,600 an ounce, according to Standard Bank Plc’s SBG Securities (Pty) Ltd. unit. “Physical demand is out there but not on the scale we saw in April,” said Huang Fulong, an analyst at CITICS Futures Co. “The recent short-covering rally is expected to continue before the U.S. holiday and payrolls data later this week,” said Huang, referring to some investors ending bets on price declines. The volume for spot bullion of 99.99 percent purity on the Shanghai Gold Exchange climbed to 15,978 kilograms yesterday from 14,660 kilograms on June 28. While volumes are elevated, China’s appetite to buy gold is much more muted compared with April, according to Barclays Plc. They reached a record 43,272 kilograms on April 22, according to exchange data. Physical demand jumped in April as Shanghai prices lost 7.4 percent. Assets in the SPDR Gold Trust, the largest bullion-backed ETP, fell to 968.3 metric tons yesterday, the least since February 2009, after holding steady for three days. Fed Chairman Ben S. Bernanke said last month that the central bank may slow its bond-buying program this year should the economy continue to improve. Government data on July 5 is forecast to indicate U.S. employers continued to add jobs last month. U.S. markets are closed on July 4 for Independence Day. Gold for August delivery traded little changed at $1,256.10 an ounce on the Comex in New York. Holders of short contracts climbed 5 percent to 77,027 futures and options by June 25, the second-highest on record, U.S. Commodity Futures Trading Commission data show. Money managers reduced their net-long position by 20 percent to the lowest since June 2007.

Written by: Kontak Perkasa Futures

PT.Kontak Perkasa Futures, Updated at: 10:09 AM