Sinking price of ingots could push up demand in the new year; didn't expect to see gold 'hold as well as it has'
Gold rose for the first time in more than a week, leading a rally in precious metals, on speculation that the lowest prices in five months will spur demand from jewelers and investors.
Gold fell 4.7 percent over the previous six sessions to the lowest since July 7 as gains by the dollar against the euro curbed demand for the metal as an alternative investment. That may boost seasonal purchases, said Marc Ground, a commodities strategist at Standard Bank Plc. In the first quarter of 2011, jewelry demand jumped 12 percent from a year earlier in India, the world's biggest buyer, according to World Gold Council data.
“While we haven't seen physical demand pick up yet, maybe people are anticipating it for next year,” Ground said in a telephone interview from Johannesburg. “January and February are usually good months in India, and a lower gold price might attract some buyers.”
Gold futures for February delivery climbed 2.1 percent to $1,573.30 an ounce at 9:52 a.m. on the Comex in New York, ending a six-session slump that was the longest since March 2009.
While gold was up 8.4 percent this year as of yesterday, heading for an 11th straight annual gain, prices have plunged as much as 21 percent since touching a record of $1,923.70 on Sept. 6.
Dennis Gartman, the economist and editor of the Gartman Letter, said he is “about to become bullish” on gold after being neutral since mid-November.
“We did not expect to see gold hold as well as it has or did in the past 24 hours,” Gartman wrote in his letter e-mailed today.
Holdings Rise
Holdings (.GLDTONS) of gold in exchange-traded products are climbing for the first time in three weeks, according to data compiled by Bloomberg. Assets rose 0.3 percent this week after falling 1.5 percent the previous two weeks.
“We are seeing some buyers come in as the market looks oversold at current levels,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
Silver futures for March delivery jumped 3.2 percent to $28.185 an ounce on the Comex. A close at that price would mark the biggest gain since Nov. 28. and narrow its decline for 2011 to 9.7 percent, the first annual drop since 2008.
On the New York Mercantile Exchange, palladium futures for March delivery climbed 2.6 percent to $639.95 an ounce, reducing the annual loss to 20 percent, the first retreat since 2008. Platinum futures for April delivery advanced 1.5 percent to $1,387.40 an ounce. It's down 22 percent this year.
--Bloomberg News--
