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Gold Swings as Investors Weigh Fed Policy Meeting, China - (Bloomberg)

Posted by Chris Advincula on Oct 30, 2013 5:29:00 AM

Gold fluctuated before U.S. Federal Reserve policy makers conclude a meeting today as investors weighed the prospects for a reduction in stimulus with signs that demand in China may be slowing.

Bullion for immediate delivery rose and fell at least 0.3 percent before trading little changed at $1,345.60 an ounce at 3:05 p.m. in Singapore. Cash prices in Shanghai were at a discount to those overseas for four of the past seven days, signaling demand may be waning in the second-largest user, according to Dalian Fortune Futures Co. analyst Wang Weimin.

Gold rebounded this month on speculation the Fed won’t slow asset purchases until next year after a government shutdown hurt the economy. Policy makers last month unexpectedly refrained from reducing stimulus. BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday it’s imperative that tapering begins as the policy is contributing to “bubble-like markets.”

“Even if not today, tapering will come,” 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. “That’s weighed on gold for most of this year and we don’t see it changing.”

Gold declined 20 percent in 2013, heading for the first annual loss since 2000. The U.S. central bank will pare the $85 billion in monthly bond buying at its March meeting, according to a Bloomberg survey of analysts on Oct. 17-18.

Chinese Demand

Volumes for cash gold of 99.99 percent purity on the Shanghai Gold Exchange were 7,879 kilograms yesterday, bourse data show, from an average of 12,069 kilograms a day last month. Volumes were a record 43,272 kilograms on April 22, when the metal’s slump into a bear market spurred a buying frenzy.

“Chinese investors that rushed into the market earlier this year because they thought prices were cheap found that prices could fall even further,” Wang said by phone. “That has hurt sentiment.”

Spot bullion in Shanghai was $2.9149 an ounce cheaper than the price in London on Oct. 28, according to Bloomberg calculations. It was also cheaper on Oct. 22, Oct 24 and Oct. 25, the calculations show.

Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, were unchanged at 872.02 metric tons. Bloomberg’s U.S. Dollar Index, a measure against 10 currencies, was little changed today after climbing 0.4 percent yesterday.

Gold for delivery in December fell as much as 0.5 percent to $1,338.30 an ounce, dropping for a third day, and traded at $1,346.20 on the Comex. Trading volume was 35 percent below the average for the past 100 days for this time of day.

Spot silver gained 0.7 percent to $22.683 an ounce, heading for a monthly increase. Platinum rose 0.2 percent to $1,464.50 an ounce. Palladium added 0.1 percent to $747.30 an ounce. 

 

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