Gold rose to a one-week high, paring a second monthly decline, as the dollar and stocks retreated while holdings in the largest bullion-backed exchange-traded product expanded. Silver, platinum and palladium advanced.
Spot gold gained as much as 1.3 percent to $1,411.27 an ounce, the most expensive since May 22, and was at $1,406.25 at 3:23 p.m. in Singapore, heading for the first back-to-back daily climb in more than three weeks. Prices are still down 4.8 percent this month on speculation that the U.S. Federal Reserve may reduce stimulus as the world’s largest economy recovers.
Gold has lost 16 percent this year, tumbling into a bear market last month, as the U.S. Dollar Index strengthened 4.6 percent while the MSCI All-Country World Index rallied 9 percent. The dollar fell for a second day against a six-currency basket today and stocks dropped. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, expanded yesterday for the first time since May 9, according to data on the company’s website.
“We see a bit of safe-haven trade coming in,” said Yang Shandan, a senior trader at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “Physical buyers have helped to limit declines but they have also become more price-sensitive and tend to stay on the sidelines near $1,400.”
The 30-week correlation coefficient between the U.S. Dollar Index and bullion is now at -0.55, a level last reached in December. A figure of -1 means the two move opposite to each other. The correlation was 0.26 in April.