Gold run continues

New York. — Gold gained for a third day, the best run in three weeks, on speculation physical purchases may increase after prices reached a five-month low on the outlook for reduced US stimulus. Gold touched US$1 210,61 an ounce on December 6, the lowest since July 5. Volumes for bullion of 99,99 percent purity on the Shanghai Gold Exchange, the benchmark spot contract, rose yesterday to the highest since November 28. The Bloomberg US Dollar Index, a measure against 10 currencies, reached the lowest in almost three weeks.

Bullion is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value and on speculation the Federal Reserve will scale back its US$85 billion in monthly bond buying as the economy improves. Data last week showed US payrolls rose more than forecast in November. Policy makers next meet December 17 and 18.

“We see short-covering and some bargain hunting, coupled with signs of some physical demand in China,” David Govett, head of precious metals at Marex Spectron Group in London, wrote yesterday in a report, referring to closing bets on price declines. “The market is still limited on the upside. We continue to wait for next week’s” Fed meeting, he said.

Gold for immediate delivery added 0,3 percent to US$1 244,37 in London. A third day of gains would be the longest run since the period to November 15. Bullion for February delivery climbed 0,7 percent to US$1 243,30 on the Comex in New York. Futures trading volume was 18 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Fed Bank of Dallas president Richard Fisher said yesterday the central bank should begin dialling back its asset purchases as soon as possible. Policy makers may begin reducing bond buying at next week’s meeting, according to 34 percent of economists surveyed on December 6 by Bloomberg, an increase from 17 percent in a November 8 poll.

“We don’t think much will happen in the gold market between now and when the next Fed policy statement comes out,” Edward Meir, an analyst at INTL FCStone, wrote in a note. “It remains to be seen how gold will react to the Fed clarifying its intentions. Some are arguing that most of the tapering has already been discounted.”

Silver for immediate delivery gained 0,6 percent to US$19,9786 an ounce in London.

It rose for a third day in the longest rally since October. Palladium added 0,5 percent to US$739,28 an ounce. Platinum climbed 0,6 percent to US$1 382,75 an ounce. — Bloomberg.