Gold trades near week’s high as investors weigh stimulus, dollar

Gold has lost 22% this year

Gold traded near its highest in four days after climbing the most in more than two weeks yesterday as investors weighed speculation the Federal Reserve will pare bond purchases. Platinum rose to the highest in two months.

Bullion for immediate delivery added as much as 0.3 percent to $1,317.10 an ounce and was at $1,314.74 by 10:59 a.m. in Singapore. Prices rose 2 percent yesterday, the most since July 22, and are set to gain 0.2 percent this week. Gold for December increased 0.3 percent at $1,313.90 on the Comex in New York.

The metal lost 22 percent this year on speculation the Fed will wind down its quantitative-easing program. Charles Evans, Sandra Pianalto and Richard Fisher, regional Fed presidents in Chicago, Cleveland and Dallas, said this week the central bank may be closer to tapering bond buying as the jobs market recovers. Jobless claims fell in the four weeks ended Aug. 3 to the lowest since November 2007, the government said yesterday.

“People are drifting to gold as an alternative investment,” said Alexandra Knight, a National Australia Bank Ltd. economist. “We’re still seeing tapering probably beginning in about September and expectations around that are having an impact. We don’t see gold surging ahead any time soon.”

The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major counterparts, fell 1.1 percent this week. It touched 1,015.49 yesterday, the lowest since June 19. Fourteen analysts surveyed by Bloomberg expect prices to drop next week, nine were bullish and seven neutral, the largest proportion of bears since the week ended June 21.

Tapering, China

Fed Bank of Cleveland’s Pianalto said Aug. 7 there has been “meaningful improvement” in the labor market and tapering may be warranted if it continues to strengthen. Dallas Fed President Richard Fisher said on Aug. 5 the central bank is closer to slowing bond buying and warned investors not to rely on stimulus. Fed Bank of Chicago President Charles Evans said Aug. 6 he “would clearly not” rule out a decision to begin curbing bond purchases in September.

China’s consumer price index rose 2.7 percent in July from a year earlier, the National Bureau of Statistics said. That compares with the 2.8 percent median estimate in a Bloomberg News survey and a government full-year target of 3.5 percent. Data are due today on industrial output and retail sales.

Silver for immediate delivery gained as much as 0.5 percent to $20.3605 an ounce, the highest since July 24, and was at $20.2355. Prices are set to advance 1.7 percent this week. Platinum rose as much as 0.3 percent to $1,496.60, the highest since June 11, and are up 3.2 percent this week. Palladium increased 0.3 percent to $740.30 an ounce.

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