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Gold holds near 3-week low as stocks gain, India taps idle metal
[SINGAPORE] Gold held near a three-week low as gains in global stocks cut demand for a haven and India approved a plan to tap the country's bullion to reduce imports of the metal.
Stocks climbed around the world as Japanese shares rose the most in almost seven years on optimism governments in Asia will be able to stabilize financial markets. Investors cut holdings in gold-backed funds to the lowest in a week.
"The advance in Asian stocks is bad news for gold," Thorsten Proettel, a commodities analyst at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart, Germany.
"It has limited the upside potential from safe haven demand." Bullion has dropped 5.3 per cent this year and reached a five-year low in July on expectations the Federal Reserve will raise interest rates this year. That makes the metal less attractive than other assets that pay interest or dividends. The Fed will announce its next policy decision on Sept 17.
Gold for immediate delivery was little changed at US$1,121.69 an ounce by 10:50 am in London, according to Bloomberg generic pricing. Futures for December delivery were also little changed at US$1,120.70 on the Comex in New York.
India's government on Wednesday approved a plan to tap some of the 20,000 metric tons of idle gold jewelry and bars held by households and temples to help reduce imports and maintain a healthy trade balance. The country, last year's second-biggest buyer, will also start a sovereign gold bond program.
Silver for immediate delivery was little changed at US$14.7943 an ounce in London. Palladium lost 0.4 per cent to US$587.20 an ounce while platinum added 0.3 per cent to US$1,006.53 an ounce. Protests over jobs and infrastructure provision have disrupted operations at an Anglo American Platinum mine in South Africa.