Gold ‘Finds Support at $1735’

October 16, 2012 at 10:10

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Gold was set to gain for the first time in three days as some investors bought bullion after prices dropped the most in three months yesterday.

Gold has risen 11 percent this year as central banks from the U.S. to Japan and China took steps to support growth hurt by Europe’s debt crisis. Gold has retreated since climbing to $1,796.10 an ounce on Oct. 5, the highest in almost 11 months, erasing gains made after the U.S. Federal Reserve announced a third round of debt-buying on Sept. 13. The European Central Bank held interest rates at a record low and the Bank of Japan (8301) kept an asset-purchase fund at 55 trillion yen ($697 billion) this month.

“The gold market experienced momentum-based selling but appears to have found a base around the $1,735 an ounce level,” Australia & New Zealand Banking Group Ltd. (ANZ) analysts led by Mark Pervan wrote in a report today. “Weaker inflation data from China likely pressured gold prices despite the more positive U.S. retail sales data.”

Consumer prices in China rose 1.9 percent in September from a year earlier, close to the slowest pace in two years, the National Bureau of Statistics said yesterday. U.S. retail sales increased 1.1 percent in September, compared with the 0.8 percent rise forecast by economists, the Commerce Department said yesterday.

Bullion also gained as the dollar weakened. The U.S. Dollar Index, a gauge against six counterparts, fell 0.3 percent today. Gold usually moves inversely to the greenback.
Holdings in gold-backed exchange-traded products declined for a second day yesterday, falling 0.2 percent, after climbing to a record 2,582.984 metric tons on Oct. 11.