Gold Holds On To Gains As ETF’s Grow

Gold is surprising many metal dealers; just a few weeks ago major brokers and analysts were predicting gold to tumble as low as $1120 before the spring time. Commodity traders

seemed oblivious to the dire predictions as gold tipped a recent high this week and closed at 1342 on Tuesday. In the Asian session on Wednesday morning gold is holding steady at 1340.30 while silver gave up 109 points to fall to 21.892.   An increase in holdings of bullion-backed exchange traded funds highlights renewed investor interest in gold, but physical buyers in key consumers such as India and China could be waiting for a price correction.  Hong Kong’s net gold exports to China fell 5.4 percent to 89.745 tons in January from 94.847 tons in December, reflecting a slowdown in demand from record levels in 2013.  SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, showed on its website that holdings rose 0.26 percent to 803.70 tons on Tuesday from 801.61 tons on Monday.  Speculators have moved back into the metal on worries about economic conditions in the United States and also China, which is now dealing with unprecedented growth in company debt.

Market analysts said a weak trend in the overseas markets due to subdued physical demand at higher levels mainly put pressure on gold prices in futures trade here. Gold is set for the first back-to-back monthly gain since August as concern that the U.S. recovery may be faltering and unrest in emerging markets including Ukraine increased demand for a store of value. Bullion rose 11 percent this year even as the Fed scaled back stimulus, rebounding from last year’s 28 percent drop that was the biggest annual loss since 1981. The US dollar gained a few points this morning to trade at 80.21.

Industrial and base metals continued to ease this morning as weak US and Chinese data weigh heavily on the metals family. Copper gained a few points coming off of its recent low to trade at 3.227. Copper traded near a three-week low after a report showed flagging U.S. consumer confidence and amid concern that China’s growth is slowing, damping demand prospects from the world’s two biggest users. The Conference Board’s U.S. consumer confidence measure fell more than analysts predicted in February, a report yesterday showed. In China, a weaker property market and falling currency fueled concern about the country’s slowing economic growth.

Platinum gave up 0.2 percent to $1,436.38, trimming a third monthly advance, while palladium increased 0.1 percent to $736.10 an ounce, poised to snap a three-month drop. In South Africa, the Commission for Conciliation, Mediation and Arbitration will meet the Association of Mineworkers and Construction Union to resolve a strike that began Jan. 23.