Gold Narrows Second Weekly Decline as Equity Drop Spurs Demand
New York (May 13) Gold climbed, trimming a second weekly decline, as a drop in equities boosted demand for the metal as haven.
Gold rose as much as 1 percent as European stocks retreated for a third day after weakening corporate earnings eroded investor confidence. The metal gained even after Regional Federal Reserve chiefs for Boston and Kansas City said Thursday that the central bank risks stoking an asset bubble by delaying raising interest rates for too long.
Bullion rallied 20 percent this year as traders pared back expectations for the pace of U.S. rate increases, boosting gold’s appeal against interest-bearing assets. Still, prices are down 1.2 percent this week as the dollar rebounded, curbing demand for an alternative investment. The Bloomberg Dollar Spot Index rose 0.2 percent Friday.
“Gold has managed to resist the headwind being generated by the stronger dollar, with the focus instead being fixed on lower stocks and falling bond yields,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail.
Bullion for immediate delivery gained 0.8 percent to $1,274.10 an ounce by 11:51 a.m. in London, according to Bloomberg generic pricing. Prices reached the highest in more than a year on May 2.
Holdings in bullion-backed exchange-traded products increased for a 13th day on Thursday, data compiled by Bloomberg show. Assets rose 3.7 metric tons to 1,814.7 tons, the highest since December 2013.
In other precious metals:
•Silver climbed 0.7 percent to $17.091 an ounce, cutting this week’s loss to 2.2 percent.
•Platinum advanced 0.9 percent to $1,056.54 an ounce.
•Palladium rose 0.7 percent to $599.05 an ounce.