Bloomberg News

Gold Set to Gain Before Bernanke Speech, Holdings Reach Record

August 29, 2012

Gold is poised to advance for a second day on speculation that Federal Reserve Chairman Ben S. Bernanke may hint at fresh stimulus measures in a speech later this week and as investor holdings climbed to an all-time high.

Gold for immediate delivery rose as much as 0.2 percent to $1,669.95 an ounce, erasing an earlier 0.2 percent decline. The metal was little changed at $1,668.50 at 2:53 p.m. in Singapore. Holdings in exchange-traded products backed by bullion rose to a record, overtaking Italy to become the world’s third-biggest hoard. December-delivery futures were little changed at $1,671.30 an ounce on the Comex in New York.

A report yesterday showed the biggest drop in U.S. consumer confidence in 10 months, helping fuel speculation that the Fed will step up measures to stimulate growth. Options traders are boosting bullish wagers on gold to an almost four-year high, betting Bernanke will hint at additional steps in a speech he is set to deliver on Aug. 31 at the Kansas City Fed’s symposium in Jackson Hole. At the event in 2010, he foreshadowed a second round of bond buying.

“The market has run gold prices up on the rumor of quantitative easing,” said David Lennox, a resources analyst at Fat Prophets in Sydney. “The one thing that’s kept the gold price from collapsing completely has been the move away from holding gold shares to holding direct gold through ETFs.”

Investors in ETPs now own an all-time high 78.99 million ounces, exceeding Italy’s 78.83 million ounces, according to data compiled by Bloomberg and the International Monetary Fund. Only the U.S. and Germany hold more.

The ratio of outstanding calls (GLD:US) to buy the SPDR Gold Trust versus puts to sell jumped to 2.69-to-1 on Aug. 24 and reached 2.76 earlier this month, the highest level since October 2008, according to data compiled by Bloomberg.

Spot silver gained as much as 0.3 percent to $30.9669 an ounce, erasing an earlier 0.5 percent drop. Palladium dropped as much as 0.7 percent to $634.75 an ounce and was at $637.

Platinum rose 0.2 percent to $1,521.90 an ounce. ETPs backed by the metal were 0.2 percent higher at 43.885 metric tons yesterday, the highest since September, data compiled by Bloomberg showed.

To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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Companies Mentioned

  • GLD
    (SPDR Gold Shares)
    • $115.39 USD
    • 0.53
    • 0.46%
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