October 10, 2016
Gold Rebounds as Weekly Slump Attracts Funds Into Global ETFs
(Bloomberg) - Gold rebounded from the biggest weekly decline this year as investors piled into bullion-backed exchange-traded funds, lifting global holdings to the highest since 2013, and as the dollar fell for a second day.
Bullion for immediate delivery rose as much as 0.6 percent to $1,264.35 an ounce, and was at $1,262.61 at 10:59 a.m. in Singapore, according to Bloomberg generic pricing. Last week, the metal sank 4.5 percent, the most since the period to Nov. 6, as investors debated prospects for higher U.S. rates.
Gold rallied 25 percent in the first half as ETF holdings surged, and the increase in assets last week signaled there’s still demand for the metal even as some investors anticipate higher U.S. borrowing costs. While futures now indicate a 64 percent chance of a hike in December, the ETF holdings have expanded to 2,046.4 metric tons, the highest since June 2013.
“The correction that we saw last week was probably somewhat overdone,” David Lennox, a resources analyst at Fat Prophets in Sydney, said by phone. “We’re just seeing a bit of a technical adjustment on the back of the fact that we’re still possibly not going to have an interest rate rise in 2016.”
The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.2 percent on Monday after a similar drop on Friday. The declines followed data showing the U.S. added156,000 jobs in September, compared with a median forecast of 172,000 in a Bloomberg survey of economists.
Goldman Sachs Group Inc. has said that a decline in prices significantly below $1,250 an ounce would present investors with a strategic buying opportunity, with gold offering protection against risks to global growth and limits to central banks’ effectiveness.
As prices fell last week, traders cut bets on a rally by the most since late May. The net-long position in gold futures and options fell 22 percent to 205,176 for the week to Oct. 4, according to Commodity Futures Trading Commission data released three days later.
In China, prices declined as trading restarted after a week’s holiday. Bullion of 99.99 percent purity slumped 4.3 percent to 272.69 yuan a gram ($1,265.25 an ounce) on the Shanghai Gold Exchange.
On the Shanghai Futures Exchange, gold for December delivery fell 4.3 percent to 273 yuan a gram, while silver tumbled 7 percent to 3,966 yuan a kilogram, the most since April 2013.
On global markets,silver climbed 0.6 percent, platinum added 0.4 percent and palladium advanced 0.8 percent.