Gold resumes rise, headed for fifth week of gains
LONDON — Gold rose back above $1,770 an ounce on Friday, on track for a fifth week of gains, as expectations that central bank measures to stimulate growth would boost liquidity, fuel inflation and keep interest rates at rock bottom.
Gains in other markets also supported bullion. European shares and the euro rose back up and oil rebounded from a one-and-a-half-month low as investors moved back into markets still feeling the benefits of central bank support measures.
Spot gold was up 0.4% at $1,773.44 an ounce at 9.45am GMT, while US gold futures for December delivery were up $6.10 an ounce at $1,776.30.
The Bank of Japan is the latest central bank to unveil easing measures this week, after the US Federal Reserve announced an aggressive asset purchasing programme and the European Central Bank unveiled plans this month to buy bonds of the bloc’s heavily indebted countries.
The Fed move in particular, to buy $40bn a month in mortgage-backed debt until the outlook for the labour market improves, helped push spot gold to six-and-a-half-month highs at $1,779.10 an ounce.
"With the open-ended scheme to print as much dollars as needed until the US economy recovers, gold’s uptrend has fewer barricades on the way at least to earlier highs," Richcomm Global Services senior analyst Pradeep Unni said.
"Charts hint at a major resistance at $1,787-$1,790, where we have failed thrice earlier," he said. "Thus, consecutive closing above $1,790 will be a necessity to avoid a profit-taking correction."
The Fed measures have boosted interest in gold exchange-traded funds (ETFs), popular investment vehicles that issue securities backed by physical metal.
Holdings of ETFs tracked by Reuters, which includes the SPDR Gold Trust and products operated by London’s ETF Securities and Zurich Cantonalbank, have risen 272,302 ounces so far this week, though they have retreated from record highs.
"Once again, the rise in prices has gone hand in hand with inflows into ETFs," Commerzbank said in a note.
Disruption in the South African mining industry, which earlier this month helped drive platinum prices to levels not seen since late February, showed signs of spreading on Friday.
Workers have embarked on an illegal strike at a mine run by world number three bullion producer AngloGold Ashanti, a company spokesman said on Friday. He said the mine had 5,000 workers and that strikers had not yet communicated their demands.
The disruption comes a day after thousands reported back for work at platinum producer Lonmin after a wage hike deal was reached to end six weeks of industrial action and protest in which 46 people died.
"Headlines out of South Africa continue to capture market’s attention despite the agreement reached at Lonmin this week," UBS said in a note.
"On the one hand, the end of the nearly six-week-old strike is a positive development as operations can now begin to normalise.
"But on the other hand, the company has now deemed to have set a precedent, with the workers’ successful call for wage increases likely to fuel discontent elsewhere," it said. "This puts pressure on other producers to face the same calls and so places further supply risks for platinum over the weeks ahead."
Spot platinum was up 0.6% at $1,631.25 an ounce. Among other precious metals, spot palladium was up 1.4% at $669.47 an ounce, while spot silver was up 0.6% at $34.78 an ounce.
Data from Chinese customs officials showed China’s silver imports fell 3.4% on the year to 304,216 kg in August, while the year-to-August number dropped 25%.
Palladium imports fell 31.53% on the year, but platinum imports jumped 43%.