Bloomberg News
By Glenys Sim
Gold bars weighing one kilogram each sit on a table in the vault of gold vendor ProAurum in Munich, Germany.
Photographer: Guenter Schiffmann/Bloomberg
Gold may rebound, after dropping for the first time in eight sessions, on speculation that the U.S. Federal Reserve may take steps to boost the economy amid signs of faltering growth, increasing demand for a haven.
Spot gold was little changed at $1,620.55 an ounce at 12:24 p.m. in Singapore. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, were unchanged at a one-month high of 1,281.62 metric tons yesterday, the company’s website showed.
Gold prices almost doubled after the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 to June 2011. The central bank will review new economic forecasts as it concludes a two-day meeting today, and may announce further measures to spur growth after recent data in the housing and labor markets missed projections.
“Investors are exercising caution in case the Fed disappoints,” said Huang Fulong, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. “Gold above $1,600 has easing priced in and may sell off hard if some form of stimulus isn’t taken.”
August-delivery bullion was little changed at $1,621.20 an ounce after falling as much as 0.3 percent on the Comex in New York. Futures fell for a second day yesterday as a drop in Spanish bond yields eased concern that Europe’s debt crisis is worsening, offsetting a report that showed builders in the U.S. broke ground on fewer homes in May than forecast.
Central Banks
Central banks, the largest holders of gold, may buy more this year than the purchases of 456 tons in 2011 as countries diversify their reserves, according to the World Gold Council. Central banks are expanding reserves for a third straight year as prices head for a 12th consecutive annual gain.
“We have seen many countries, especially the emerging economies, buying gold during this economic turmoil,” Ashish Bhatia, the manager of government affairs at the producer-funded World Gold Council, said in New York yesterday. “Also, sales from central banks have dried up in the past couple of years.”
Spot silver was unchanged at $28.4475 an ounce after gaining as much as 0.5 percent. Cash platinum rose as much as 0.5 percent to $1,489 an ounce and was last at $1,486.50. Palladium was little changed at $629 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net