Gold May Climb in Asia as Prices Near Three-Month Low Spur Buyer Demand

Gold may advance for a second day on speculation the metal’s prices near a three-month low will help shore up demand.

Gold for immediate delivery traded little changed at $1,165.15 an ounce at 8:38 a.m. in Singapore. December-delivery futures rose 0.5 percent.

“The correction phase of gold is about to be completed and the market will see some period of consolidation near this or a slightly lower level until next week,” said Wallace Ng, executive director with ABN Amro NV in Hong Kong.

Bullion, which touched a record $1,265.30 on June 21, has since slumped 8 percent and fell as low as $1,157.03 this week, the lowest since April 27, as a rally in global equities curbed demand for bullion. Asian stocks have climbed 5.7 percent in July, snapping a two-month decline, while gold fell 6.2 percent, the first monthly decline since March, as investors reduced holdings of safer assets in search of higher returns.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell for a third day yesterday. Assets under management have dropped 2.9 percent this month.

Investors are shifting their money into riskier asset classes, Eugen Weinberg, Frankfurt-based head of commodity with Commerzbank AG, wrote in a report. Still, “in the mid to long term the physical buying interest is expected to pick upon the currently low price level and thus prevent a clear slide of the gold price.”

Physical demand for gold from India, China and the wider Asian region was “very visible” as gold prices declined this week, UBS AG analyst Edel Tully said yesterday. Still, physical demand isn’t sufficient to prop up the price and the short-term outlook was “increasingly murky,” she said.

“Few investors are likely to add to their long gold exposure down here, afraid of catching a falling knife, until some sense of stability is restored to price direction,” London-based Tully said in a report.

Silver increased 0.5 percent to $17.555 an ounce, platinum added 0.2 percent to $1,542.50 an ounce and palladium advanced 0.4 percent to $471.25 an ounce.