ETP Gold Holdings Hit Record

July 4, 2012 at 06:37

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Gold has recently risen on signs of some increased investment demand and on speculation that central banks will take more steps to boost growth.

Spot gold was little changed so far today, swinging between gains and losses. The metal climbed 1.3 percent yesterday to a two-week high. Assets held in exchange-traded products backed by bullion expanded to a record 2,412.422 metric tons yesterday.

“While gold has maintained its safe-haven status to an extent, it is exhibiting increasingly similar characteristics to other risk assets, like the industrial commodities,” Alexandra Knight, an economist at National Australia Bank Ltd. (NAB), wrote in a report today. “A steady U.S. dollar and emerging deflation worries have limited demand for gold recently.”

Manufacturing deteriorated from the U.S. to China, according to data this week, fueling speculation central banks will add to stimulus. That helped commodities rally to a five- week high yesterday. August-delivery bullion fell as much as 0.4 percent to $1,614.60 an ounce on the Comex in New York, and was last at $1,618.30, after a 1.5 percent gain yesterday. U.S. markets are closed today for the Independence Day holiday.

The Federal Reserve bought $2.3 trillion of debt in two rounds of quantitative easing, or QE, from December 2008 to June 2011 and gold almost doubled in that time. Cash gold slumped 4.3 percent in the second quarter, the most since the three months to September 2008, as the Dollar Index rallied 3.3 percent, after the Fed didn’t buy more debt and instead extended a program of replacing short-term bonds with longer-term debt.