Gold held near the highest in almost two weeks as speculation some investors are cutting bets on lower prices was weighed against signs of an improving U.S. economy. Palladium traded near a more than three-year high.
Short gold holdings, or bets on a price drop, reached the highest since January in the week ended June 3, U.S. Commodity Futures Trading Commission data show. Bullion rose as much as 1.5 percent since then, halting declines last week at about $1,240 an ounce, partly as the European Central Bank became the first major central bank to take one of its main rates negative.
Gold fell to a four-month low on June 3. U.S. data due tomorrow may show retail sales rose in May, after a report last week showed employment exceeded its pre-recession peak, sending U.S. equities to a record. Palladium, used in pollution control devices in cars, climbed 19 percent this year as mineworkers went on strike since January in South Africa, the second-largest producer. Talks ended without a resolution two days ago.
“The failure to break below $1,240 last week coupled with the ECB announcing fresh stimulus measures seem to be inducing bears to trim some of their bearish bets,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “We do not expect gold to gain much ground as long as equities in the U.S. are in an upward trajectory and U.S. data continue to keep coming good.”
Bullion for immediate delivery added 0.1 percent to $1,261.07 an ounce by 9:06 a.m. in London, according to Bloomberg generic pricing. It reached $1,263.66 yesterday, the highest since May 28. Gold for August delivery rose 0.1 percent to $1,261.20 on the Comex in New York. Futures trading volume was 50 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold slid 28 percent last year, ending a 12-year bull run, on speculation the Federal Reserve would cut bond purchases. It has made four cuts since January and next meets June 17-18.
“With U.S. equities near the peak, it would be difficult for gold to sustain any rallies,” said Zhu Siquan, an analyst at GF Futures Co., a unit of the Guangzhou, China-based company that bought Natixis Commodity Markets Ltd.
Silver for immediate delivery added 0.1 percent to $19.2122 an ounce in London. Platinum lost 0.5 percent to $1,475.50 an ounce, after climbing to a two-week high of $1,484.25 yesterday. Palladium was little changed at $854.25 an ounce. It reached $856.01 yesterday, the highest since February 2011.
Producers in South Africa, the biggest platinum supplier, have lost about 21.9 billion rand ($2 billion) in revenue, making it the country’s longest and costliest mining strike. The minister who led the latest round of failed talks said job cuts grow more likely as the dispute drags on.
Investors hold a record 86.5 metric tons of platinum and an all-time high 91.8 tons of palladium in exchange-traded products backed by the metals, data compiled by Bloomberg show.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.