Gold gains on Fed debt-buying and steady holdings in biggest ETF

Gold advanced in New York after the Federal Reserve said it will keep buying debt to stimulate the U.S. economy and holdings in the biggest exchange-traded fund backed by bullion held steady for a fourth day.

The Fed said yesterday it will continue its third round of quantitative easing and inflation will rebound in the “medium term.” Employers in the U.S. hired 185,000 workers last month after a 195,000 gain in June and the jobless rate fell to 7.5% from 7.6%, economists said before tomorrow’s release of government figures.

“Policymakers are in no rush, allowing themselves a little more time to consider all options, reiterating that QE3 tapering is still contingent on unemployment figures,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report today. “Now all eyes are on Friday’s jobs report.”

Gold for delivery in December rose 0.8% to $1,323.70 an ounce by 8:16 a.m. on the Comex in New York. Gold for immediate delivery slipped 0.1% to $1,324.22 an ounce in London, erasing a climb of as much as 0.4%,

“The fact that bond purchases to the tune of $85 billion per month will continue, coupled with the fact that inflation is expected to pick up, should lend support to the gold price in the next few months,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt.

Holdings in gold-backed exchange-traded products fell 3.6% last month, the least since March, according to data compiled by Bloomberg. Gold ETPs shrank 25% this year. Holdings in the SPDR Gold Trust held at 927.35 metric tons yesterday, the longest stretch since March.

“ETF outflows seem to have stopped for the time being, and this, coupled with physical demand lower down, should keep a floor under the market for the time being,” David Govett, head of precious metals at Marex Spectron, said in a report.

Silver for delivery in September rose 0.9% to $19.805 an ounce in New York. Platinum for delivery in October climbed 0.8% to $1,441.30 an ounce and palladium for delivery in September gained 0.8% to $732.20 an ounce.

www.bloomberg.com

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