Gold Holds Near Two-Week High as Bets on Lower Prices Ended

04:26 PM @ Monday - 17 November, 2014
Gold traded near the highest level in two weeks as some investors ended bets on lower prices after the metal posted the first back-to-back weekly gain in a month. Platinum fell while palladium advanced.

Bullion for immediate delivery rose and fell at least 0.5 percent, and traded little changed at $1,188.83 an ounce at 2:59 p.m. in Singapore, according to Bloomberg generic pricing. The metal earlier climbed to $1,194.38, the highest level since Oct. 31, after rising 2.3 percent on Nov. 14 as a rebound in energy prices reduced deflation concerns.

Gold is heading for the first consecutive annual loss since 2000 as the Federal Reserve assesses the timing of interest-rate rises while other central banks take steps to spur growth, strengthening the dollar. Bullion advanced on Nov. 14 even as the Bloomberg Dollar Spot Index traded near a five-year high to complete a fourth weekly increase. The Fed this week releases minutes of its Oct. 28-29 meeting, when it ended its asset-purchase program on schedule.

“There was a nice short-covering rally on Friday as some investors close out their positions heading into the end of the year, and we’re seeing a bit of catch up in Asia today,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co. Short covering refers to ending wagers that prices will decline. “The long-term picture is still not bright because of the outlook for the dollar.”

SPDR Holdings

Gold for December delivery rose as much as 0.7 percent to $1,193.60 an ounce on the Comex, the highest level since Oct. 31. Most-active futures traded at $1,189.30 after rising 1.4 percent last week. The net-long position in New York futures and options fell 14 percent in the week to Nov. 11.

Holdings in the SPDR Gold Trust, the largest ETP backed by the metal, were unchanged at a six-year low of 720.62 tons on Nov. 14. Billionaire hedge fund manager John Paulson kept his stake in the fund unchanged for a fifth straight quarter, according to a Nov. 14 government filing.

The uncertainty surrounding the outcome of an upcoming referendum in Switzerland is also lending some support to prices, according to Gemsha’s Ng. Voters on Nov. 30 will decide whether the Swiss National Bank should keep at least 20 percent of its assets in gold, up from 8 percent now.

The referendum is a so-called tail risk for prices, Barclays Plc analysts wrote in a report today, while the complexity of the proposal is a substantial hurdle for a “yes” vote, according to Morgan Stanley in a Nov. 10 report.

Silver for immediate delivery rose as much as 1.2 percent to $16.50, the highest since Oct. 31, before trading at %$16.3091. Earlier, the metal lost as much as 0.4 percent.

Spot platinum slid 0.5 percent to $1,207.65 an ounce, extending five weeks of losses. Palladium increased 0.5 percent to $770.50 an ounce, after prices last week posted a second weekly retreat.
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