Gold rises after worst week since November as ETF holdings gain

[SINGAPORE] Gold rebounded from the biggest weekly decline in almost a year as investors piled into bullion-backed exchange-traded funds and the US dollar weakened after the US added fewer-than-expected jobs last month.

Bullion for immediate delivery climbed as much as 0.6 per cent to US$1,264.35 an ounce, and was at US$1,259.99 at 9:40am in Singapore, according to Bloomberg generic pricing. The metal fell 4.5 per cent last week, the most since the period to Nov 6.

Gold has retreated after a 25 per cent rally in the first half of the year as the probability for higher US borrowing costs increased, damping the appeal of the non-interest bearing asset. The US added 156,000 jobs in September, compared with a median forecast of 172,000 in a Bloomberg survey of economists, while the August jobs gain was revised higher, the Labor Department said Friday. The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, fell 0.2 per cent on Monday after a similar decline on Friday.

While futures indicate a 64 per cent chance of a rate hike in December, investors are still adding to holdings in ETFs backed by the metal, with assets rising to the highest level in more than three years. Still, some traders are bracing for more price declines, cutting their bets on a bullion rally by the most since late May.

BLOOMBERG