Gold Set for Biggest Weekly Climb in 10 Months After Swiss Shock
(Bloomberg) — Gold traded near a four-month high, heading for the biggest weekly advance since March, on haven demand after Switzerland’s unexpected currency move. Assets in the largest exchange-traded product expanded the most since 2011.
Bullion for immediate delivery was at $1,260.79 an ounce at 10:24 a.m. in Singapore from $1,262.75 a day earlier, when prices jumped 2.8 percent for the biggest increase this year, according to Bloomberg generic pricing. The metal rallied on Thursday to $1,266.85, the highest since Sept. 8, as the Swiss National Bank ended the franc’s cap versus the euro. Gold traded at its most expensive relative to platinum since April 2013.
Gold surged 3.1 percent this week for the biggest climb in almost a year as the Swiss bank’s move roiled currency and equity markets. That spurred demand for the bullion as a haven as investors returned to ETPs, according to Australia & New Zealand Banking Group Ltd. European Central Bank policy makers meet on Jan. 22 to discuss introducing new stimulus amid concern Greece may exit the currency bloc after a Jan. 25 election.
“Investor uncertainty and surprise triggered flows into bullion,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. The price rise will curb emerging-market and other demand and should eventually rein in prices, he said.
Spot bullion’s advance sent the metal’s 14-day relative- strength index toward the level of 70 that signals to some investors that prices may reverse. The gauge was at 68.69 on Friday from 68.52 a day earlier.
Commodity Prices
Gold denominated in euros climbed to the highest level since May 2013 as the SNB also deepened negative deposit rates on Jan. 15. The Bloomberg Dollar Spot Index held a two-day decline before U.S. data on consumer prices.
A slump in commodity prices led by crude and copper may hold down inflation, which has been under the Federal Reserve’s 2 percent target for 31 straight months, raising speculation the central bank may hold back from raising its key rate, which has been kept at virtually zero since 2008 to spur growth.
“Precious metals have caught a break as Europe moves closer to full-blown quantitative easing,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “While loose monetary policy is expected to continue around the world, highlighting differences with the U.S., this ultimately strengthens the dollar, which is negative for gold.”
Holdings in the SPDR Gold Trust expanded 1.4 percent to 717.15 metric tons on Jan. 15, the biggest jump since August 2011. The assets contracted 41 percent in 2013 and fell a further 11 percent last year as prices dropped.
Winning Streak
Gold for February delivery lost 0.2 percent to $1,259.80 an ounce on the Comex in New York, halting a five-day rally that was the longest winning streak since June. Futures rose a day earlier to $1,267.20, the highest since Sept. 8.
One ounce of platinum bought as few as 0.9951 ounces of gold on Friday. Platinum for immediate delivery was at $1,259.63 an ounce from $1,259.50 a day earlier, when prices climbed 2.2 percent. This week, it’s risen 2.1 percent.
Spot silver rose 0.7 percent to $17.0605 an ounce, after climbing a day earlier to $17.2258, the highest level since Dec. 10. The metal is heading for a second weekly increase. Palladium climbed 0.6 percent to $771.67 an ounce, trimming the biggest weekly loss since September.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Jake Lloyd-Smith
