Gold Trades Above Four-Year Low on Signs of Physical Demand

03:42 PM @ Tuesday - 11 November, 2014
Gold held above the lowest level in more than four years on speculation the price decline spurred physical purchases even as investment demand waned.

Gold for immediate delivery traded at $1,152.84 an ounce at 3:33 p.m. in Singapore from $1,151.47 yesterday, after earlier climbing as much as 0.5 percent, according to Bloomberg generic pricing. The metal fell yesterday to $1,147.46 and sank to $1,132.16 on Nov. 7, the lowest level since April 2010.

Spot gold in Shanghai yesterday traded at the biggest premium to London prices in five weeks, Bloomberg calculations show. Assets in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, fell to the least since September 2008 yesterday, shrinking for a fifth day for the longest slump this year.

“Physical demand tends to improve at lower prices,” Zhu Runyu, an analyst at CITIC Futures Co., a unit of China’s largest listed brokerage, wrote in a note today. “Prices may see a small rebound as short investors close out their positions, but we believe the downtrend for gold remains as the U.S. looks to raise interest rates.” Bets on lower prices in New York futures and options rose 14 percent in the week ended Nov. 4, the first gain in a month, U.S. government data show.

Gold for December delivery slid 0.7 percent to $1,151.90 an ounce on the Comex in New York after most-active prices sank to $1,130.40 on Nov. 7, the lowest level since April 2010. Futures are 4.2 percent lower this year as the Bloomberg Dollar Spot Index rose to a five-year high on expectations that an improving U.S. economy will spur higher borrowing costs.

Silver for immediate delivery fell 0.1 percent to $15.5945 an ounce. Spot platinum added 0.4 percent to $1,202.25 an ounce and palladium rose 0.1 percent to $764.25 an ounce.
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