Gold Rallies Above $1,300 on Outlook for Stimulus, China Demand Gold jumped to a one-month high as reduced expectations that the U.S. Federal Reserve will soon taper monetary stimulus weakened the dollar, while investors speculated demand may improve after China changed lending rules. Spot gold climbed as much as 1.8 percent to $1,319.99 an ounce, the highest level since June 20, and traded at $1,316.11 at 9:34 a.m. in Singapore. Holdings in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, fell 0.7 percent last week, the least since the five days to June 14. Gold rose 0.8 percent last week, capping the first back-to-back weekly gains since May, after Fed Chairman Ben S. Bernanke indicated that it’s too early to decide whether to begin scaling back bond purchases in September, weakening the dollar. The People’s Bank of China said July 19 it ended a floor on lending rates, a move that may offer consumers more spending power. “Investor sentiment toward gold seems to be turning more positive after Bernanke’s comments last week and we’re probably going to see more short-covering in the near term as the U.S. dollar gets sold off,” Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks, said by phone from Hangzhou. Short-covering refers to ending of bets on losses. Gold slid 22 percent this year, wiping more than $58 billion from the value of ETP holdings, after some investors lost faith in the metal as a store of value. Bullion entered a bear market in April, after rallying for 12 years, as unprecedented money printing by central banks around the world failed to spur inflation.
Posted on: Mon, 22 Jul 2013 04:27:10 +0000
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