Gold in Asia Rises as Investors Raise Bets on Bullion Recovery

Gold in Asia Rises as Investors Raise Bets on Bullion Recovery

Gold in Asia rose as some investors, undeterred by the metal’s 20 percent drop from a 26-year high last month, raised their holdings of bullion-backed securities in anticipation of rising prices.

Exchange Traded Gold, which manages gold-back securities, increased gold under management to 452 metric tons as of yesterday from 443 tons on June 1, Simon Village, principal of the London-based company, said yesterday. Its gold-backed securities trade on exchanges in the U.S., U.K., Australia, France and South Africa.

“The return of retail commodities fund is having an impact,” said Ron Cameron, a resources analyst at Ord Minnett Ltd., in Sydney. “The funds are pushing the price a bit to see where it would settle.”

Gold for immediate delivery rose as much as $7.98, or 1.4 percent, to $585.04 an ounce. The metal, which had its steepest one-day decline in 23 years on June 13, traded at $581.30 an ounce at 12:40 p.m. India time.

Spot gold has fallen 20 percent since touching a 26-year high of $730.40 on May 12, on concern rising interest rates will make it more expensive to buy gold. The bullion has gained for five straight years, the longest winning streak since the 1970s, on expectations the U.S. dollar will weaken.

“Its more of the first stage of a bull market, and with the correction we’ll trend upwards again,” said Peter McGuire, managing director of Commodity Warrants Australia in Sydney. “We’ll be looking at $640 to $650 in a month or so.”

`Fall Over’

The U.S. currency fell against the euro and yen on concern a government report today will show the U.S. current-account deficit held near a record in the first quarter.

The dollar fell against the euro for a third day, trading at $1.2653 at 12:41 p.m. Mumbai time, from $1.2636 late yesterday in New York. Against the yen, it fell to 114.64 yen, from 114.75 yesterday.

The U.S. current-account gap will likely be little changed at $222 billion in the first quarter from the $224.9 billion all-time high in the fourth quarter, according to the median forecast of 46 economists surveyed by Bloomberg News.

Metals including zinc and copper have also dropped in the past month on concern higher interest rates will slow global economic growth and hurt demand for raw materials.

“The fall may be over as the U.S. can’t keep raising interest rates,” said Si Kannan, an analyst at Mumbai-based Sharekhan Commodities Pvt.

The U.S. Federal Reserve officials are scheduled to meet June 29 to discuss rate hike. The central bank has raised its benchmark interest rate 16 times since June 2004 to 5 percent.

Gold for August delivery rose as much as $18.70, or 3.3 percent, to $589.00 an ounce in after-hours trade on the Comex division of the New York Mercantile Exchange. The contract traded at $584.80 at 12:46 p.m. India time.

In India, the world’s biggest gold consumer, gold prices for August delivery rose 204 rupees, or 2.4 percent, to 8,790 rupees per 10 grams, or 27,369 rupees ($596) per ounce, at 12:48 p.m. on the Multi Commodity Exchange of India Ltd. in Mumbai. Gold for spot delivery traded at 8,678 rupees per 10 grams at 12:48 p.m. in Mumbai.


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