Bloomberg News

Gold Holdings Shrink Most in Seven Months on Signs of Recovery

February 17, 2013

Gold holdings in exchange-traded products shrank by the most in seven months as data in the U.S. added to signs that a global economic recovery is strengthening, eroding demand for haven investments.

Assets contracted 0.5 percent last week, the biggest such decline since July, according to data compiled by Bloomberg. The holdings, which reached a record in December, dropped to a three-month low of 2,602.335 metric tons on Feb. 15. Billionaire investors George Soros and Louis Moore Bacon cut their stakes in gold ETPs last quarter, while John Paulson maintained his share, government filings showed last week.

Analysts from Goldman Sachs Group Inc. to Credit Suisse Group AG are calling for gold to peak in 2013 after a 12-year bull run as the global economy rebounds. Manufacturing in the New York region unexpectedly expanded in February, and consumer confidence rose to a three-month high, separate reports showed last week. China’s economy may expand 8.1 percent this year from 7.9 percent in 2012, according to the median of analysts’ forecasts compiled by Bloomberg.

“It’s still early days to declare that we’re out of the economic doldrums, however, with data showing signs of improvement, investors would rather put their money into riskier assets,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state- owned investment companies.

Gold for April delivery gained as much as 0.6 percent to $1,618.80 an ounce, and traded at $1,617.60 at 10:31 a.m. in Singapore. The metal slumped to $1,596.70 on Feb. 15, the cheapest since August.

Bets by hedge funds and other large speculators on higher prices tumbled to the lowest since December 2008 in the week to Feb. 12, U.S. Commodity Futures Trading Commission data show.

Bullion has fallen 3.5 percent this year, lagging behind gains in platinum and palladium as faster economic growth drives demand for the metals used mainly in industry amid concern about lower supplies. Platinum’s premium to gold widened to an almost 18-month high last week.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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


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