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Gold Trades Below 2-Month High as Investors Weigh U.S. Recovery



Gold traded below a two-month high as investors assessed the U.S. economic recovery and the impact on borrowing costs amid signs of slowing physical demand.

Bullion for immediate delivery lost as much as 0.3 percent to $1,313.98 an ounce, and traded at $1,314.94 at 2:01 p.m. in Singapore, according to Bloomberg generic pricing. Gold rose to $1,322.12 on June 20, the highest level since April 15, after the Federal Reserve said it will keep interest rates at almost zero for a considerable time even as the economy improved.

Gold is on course for the first back-to-back quarterly gain since 2011, in part as violence in Iraq and tension in Ukraine spurred haven demand. The metal ended a 12-year rally in 2013 on expectations that the Fed would scale back stimulus put in place to help the economy recover from the worst recession since the 1930s. In China, the largest consumer, volumes for the benchmark spot contract in Shanghai fell for a third day yesterday.

“The U.S. has entered the monetary tightening cycle and will continue to reduce stimulus as economic data improves,” said Zhang Lin, a Hangzhou-based analyst at Yongan Futures Co. “Interest rates will rise at some point, so the longer-term outlook for gold remains bearish.”

Data today may show growth in new home sales slowed after a report yesterday said that existing home sales in May had the biggest monthly increase in almost three years.

Gold for August delivery lost 0.2 percent to $1,315.50 an ounce on the Comex in New York.
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Platinum rose 0.2 percent to $1,459.07 an ounce, and palladium increased 0.5 percent to $826.65 an ounce.

In South Africa, the largest platinum and second-biggest palladium producer, the main union at the mines of the three largest platinum companies will today sign a deal to end the five-month stoppage that’s crippled output.

Platinum has risen 2.9 percent since the end of March, heading for two quarterly increases that’s the best run since 2010. Palladium is also heading for a second quarterly rise.

Silver for immediate delivery declined 0.3 percent to $20.8210 an ounce, poised for its first back-to-back quarterly gain since 2011.