Gold Pops Up on SPDR & China Demand

August 12, 2013 at 07:22

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Gold climbed to the highest level this month after holdings in the biggest bullion-backed exchange-traded product expanded for the first time since June. Platinum advanced for a fourth day to a two-month high.

The precious metal tumbled 21 percent this year as speculation that the U.S. Federal Reserve may taper its stimulus program prompted record outflows from ETPs. Assets in the SPDR Gold Trust increased 1.8 metric tons to 911.13 tons on Aug. 9, the first increase since June 10, according to data compiled by Bloomberg. Holdings are still down 439.69 tons this year after contracting every month from January, the data show.

“What we need to maintain the current gold price level is actually inflows,” Dominic Schnider, head of commodities research at UBS AG’s wealth-management unit in Singapore, said on Bloomberg Television today, predicting lower prices in the next three to six months. “What’s really saved us so far on the consumer side in emerging markets has been China.”

Nationwide gold consumption rose 54 percent to 706.36 tons in the first six months from a year earlier, the China Gold Association said today. China’s jewelry sales climbed 42 percent in July from a year earlier, according to the National Bureau of Statistics. The country is the world’s largest gold producer.

Demand for physical metal is robust, irrespective of prices, Eddie Listorti, co-head of fixed income, currencies and commodities at Australia & New Zealand Banking Group Ltd., said in an interview last month. The bank has forecast gold at $1,400 an ounce in 2014 and $1,500 in 2015.