Gold heads for second monthly advance as haven demand increases

Turmoil in emerging markets at play

Gold headed for the first back-to-back monthly gain since August as concern that the U.S. recovery may be losing momentum and turmoil in emerging markets boosted haven demand. Assets in bullion-backed exchange-traded products were set for the first monthly increase in 14 months.

Bullion for immediate delivery was at $1,332.61 an ounce at 9:26 a.m. in Singapore from $1,331.33 yesterday. Prices are up 7 percent this month and reached a 17-week high of $1,345.46 on Feb. 26. Holdings in ETPs are up 0.3 percent in February after declining last year for the first time since the first product was introduced in 2003, data compiled by Bloomberg show.

Bullion rose 11 percent this year as U.S. data that missed estimates, including reports on factory output and retail sales, added to concern the recovery may be faltering just as the Federal Reserve tapers bond buying. Gold is the biggest gainer in 2013 after coffee and lean hogs on the Standard & Poor’s GSCI Index of 24 commodities as the cuts to stimulus precipitated a rout in emerging markets, which were further hurt by unrest in Ukraine and a slowdown in China.

“Gold has benefited from the recent spate of U.S. data weakness, as well as haven demand coming through from what’s happening in emerging markets,” Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage, said from Shenzhen. “The stabilization of ETF flows is very encouraging for investor sentiment.”

Fed Tapering

Gold rebounded from the biggest annual drop since 1981 as Fed Chair Janet Yellen said yesterday that the central bank is “open to reconsidering” the pace of scaling back asset purchases should the economy weaken. The Federal Open Market Committee, which next meets March 18-19, announced a reduction to bond buying at each of its past two meetings.

In Ukraine, the newly elected government started working on securing international financing to avert a default as separatist tensions flare in the southern Crimea region. Deposed ex-President Viktor Yanukovych, who claims to be the country’s rightful leader, surfaced in Russia and will hold a news conference today.

Gold for April delivery was at $1,332.30 an ounce on the Comex in New York from $1,331.80 yesterday, rising for a second month. Prices climbed to $1,345.60 on Feb. 26, the highest for a most-active contract since Oct. 30.

Silver rose 0.3 percent to $21.3329 an ounce, advancing 11 percent in February for the first monthly gain since October.

Platinum lost 0.2 percent to $1,450 an ounce, trimming a third monthly increase, while palladium added 0.1 percent to $743 an ounce, set for the first month of gains in four.

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