Bloomberg News

Gold Pares Worst Weekly Loss Since September as Dollar Weakens

December 16, 2011

Dec. 16 (Bloomberg) -- Gold rebounded, trimming the worst weekly loss since September, as positive economic data from the U.S. eased demand for the dollar as a haven. Platinum recovered from a two-year low, while silver and palladium advanced.

Immediate-delivery gold gained for the first day in five, gaining as much as 1.6 percent to $1,595.86 an ounce and trading at $1,594.61 at 3:22 p.m. in Singapore. This week, the metal has lost 6.9 percent, the biggest drop since Sept. 23. February- delivery gold gained 1.2 percent to $1,596.20 on the Comex.

The fewest U.S. workers in three years filed claims for jobless benefits last week, according to data issued yesterday, indicating that the world’s largest economy may be strengthening heading into 2012. The dollar fell as much as 0.6 percent yesterday, also weakening as European funding stress eased.

“Gold looks to have had a little bounce after the dollar pulled back,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “Bullion’s dramatic decline earlier this week means it should now be at a pretty solid base and will have more upside potential.”

Gold, up 12 percent this year, reached a record $1,921.15 on Sept. 6 as investors sought to diversify away from equities and some currencies amid concerns that the euro zone may fragment. Since then, it’s lost 17 percent, nearing the 20 percent drop seen by some investors as defining a bear market.

Holdings in exchange-traded products backed by bullion dropped from a record yesterday, losing 0.6 percent to 2,347.51 metric tons, according to Bloomberg data. That was the biggest one-day decline since Aug. 24.

Survey Outlook

Ten of 21 traders surveyed by Bloomberg expect the metal to gain next week, the lowest proportion since July 29.

“Bears are in the driver seat,” said Miguel Perez- Santalla, vice president of sales at Heraeus Precious Metals Management LLC in New York, whose clients include jewelers and mining companies. “But the problems in Europe have not been solved and buying will come back and we will see higher prices because of a lack of confidence in the financial system.”

Spot silver rose as much as 2.3 percent to $29.6825 an ounce, extending yesterday’s 0.9 percent advance. The price dropped to $28.13 yesterday, the lowest level since Sept. 26. This week, silver’s fallen 7.9 percent.

Spot platinum climbed 1.1 percent to $1,423.38 an ounce, rising for the first day in five. It’s down 6.1 percent this week, also the worst five-day showing since September. The price fell to $1,378.50 yesterday, the lowest since Nov. 13, 2009.

Palladium gained 1.5 percent to $628.50 for a decline of 8.3 percent this week, the worst loss since the period to Nov. 18. The price touched $600.50 on Dec. 14, the lowest level since Nov. 30.

--With assistance from Nicholas Larkin in London. Editors: Ovais Subhani, Thomas Kutty Abraham

To contact the reporter on this story: Jason Scott in Melbourne at

To contact the editor responsible for this story: James Poole at

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