Gold Recovers as Physical Demand Grows

Gold was little changed below a two-week high as investors weighed signs of more physical buying against the dollar’s advance.

Rising imports of gold in India is a positive sign and overall purchases of the metal will help support prices through November, Barclays Plc wrote in a report today. Trading today on the Shanghai Gold Exchange’s benchmark bullion spot contract was the highest since April 2013.

The Bloomberg Dollar Spot Index traded near a five-year high after a report showed Japan’s economy unexpectedly sank into a recession. Bearish wagers on gold futures and options by hedge funds are near a record, according to U.S. government data. Bullion is down 1.2 percent this year.

“The market is fundamentally weak,” David Govett, head of precious metals at broker Marex Spectron Group in London, said in a note. “I don’t believe this is the beginning of a sustained up move, but one has to be very careful when the scales are tipped too heavily on one side.”

Gold for December delivery added 0.2 percent to $1,188.40 an ounce by 7:19 a.m. on the Comex in New York. It reached $1,193.60 earlier today, the highest since Oct. 31. Bullion for immediate delivery was little changed at $1,189.30 in London, according to Bloomberg generic pricing.

Futures trading volume was more than double the average for the past 100 days for this time of day, data compiled by Bloomberg show.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza