Gold gained to a two-month high, heading for the best week in five, as lower equities and signs of rising physical purchases spurred demand. Silver was set for the best week since October 2011.
Spot gold rose as much as 0.5 percent to $1,372.97 an ounce, the highest since June 19, and traded at $1,367.67 at 9:57 a.m. in Singapore. Silver was little changed at $23.01 an ounce after yesterday rising more than 20 percent from a 34-month low on June 27 to meet the common definition of a bull market.
Gold has climbed 4.1 percent this week, the most since the five days to July 12, as a retreat in equities increased demand for the metal as an alternative investment amid signs of rising physical demand. The MSCI All-Country World Index of stocks headed for a second weekly drop on concern that the Federal Reserve will reduce stimulus as U.S. economic data improves.
“The break above $1,350 prompted a short-covering rally even though expectations are still for the Fed to scale back stimulus,” said Yang Xi, an analyst at Yongan Futures Co. in Hangzhou, China, referring to some investors closing bets on losses. “Physical demand for gold rises and falls with the price. Between the two, silver seems better placed as industrial demand should increase if the economy recovers.”
While assets in the SPDR Gold Trust, the biggest bullion- backed exchange-traded product, decreased yesterday to 912.92 metric tons, holdings are heading for a weekly increase for the first time this year. In China, consumption increased 54 percent in the first half, the China Gold Association said this week.
Gold is still 18 percent lower this year on record sales from ETPs backed by bullion, with assets in the SPDR shrinking 32 percent. U.S. filings this week showed billionaire John Paulson reduced his holding in the SPDR by 53 percent in the second quarter, while billionaires George Soros and Daniel Loeb sold their entire positions.
Bullion for December delivery rose as much as 0.8 percent to $1,372.30 an ounce on the Comex in New York, the highest since June 19. Thirteen analysts surveyed by Bloomberg expect prices to rise next week, four are bearish and five neutral, the highest proportion of bulls since March 8.
Silver for immediate delivery gained as much as 0.8 percent to $23.1855 an ounce, after yesterday climbing to $23.198, the highest since May 22. The metal is up 12 percent this week, the most since the five days through Oct. 28, 2011. One ounce of gold bought as little as 58.9 ounces of silver yesterday, the least since April 18.
Spot platinum advanced for a fourth day, after reaching $1,533.35 yesterday, the highest since June 7. The metal, which traded at $1,529.40 an ounce, is set for a sixth weekly increase, the longest run since February 2012. Palladium was little changed at $763.70 an ounce, after jumping 3.1 percent yesterday, the most since July 1. It is heading for a third weekly gain.