Gold advanced for the first time in three days, extending the best quarterly gain in more than two years, as central banks and investors bought the metal to hedge against the prospect of weaker currencies and slowing growth.
Spot gold rose as much as 0.2 per cent to $1,764.55 an ounce and was at $1,764.15 at 10:21 am in Singapore. The metal reached $1,787.52 on September 21, the highest price since February 29, and is 10 per cent higher since the end of June. That’s set for its biggest quarterly climb since the three months to June 2010.
Bullion has rallied after central banks from the US to Japan took steps to boost their economies, driving investor holdings in exchange-traded products to a record. The Federal Reserve announced on September 13 a third round of debt purchases to bolster the largest economy, potentially weakening the dollar.
“Gold continues to consolidate recent gains as the market waits for the next piece of bad news or more central-bank stimulus to take it past $1,800,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures, a unit of China’s largest state-owned investment group.
December-delivery gold was little changed at $1,765.30 an ounce on the Comex, after dropping 0.3 per cent. Holdings in gold-backed ETPs climbed to 2,551.859 tonnes yesterday.
Kazakhstan expanded its gold reserves for a 13th month in August, buying 1.4 tonnes, data on the International Monetary Fund’s website showed. South Korea bought 16 tonnes in July, and Paraguay purchased 7.5 tonnes that month.
A key, long-term driver for gold demand will be central- bank gold purchases, Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an email. They need more gold in reserves because the precious metal maintains its value and adds to the diversification benefits of portfolios.
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In China, cash gold of 99.99 per cent purity on the Shanghai Gold Exchange was little changed at 358.31 yuan a gramme ($1,766.92 an ounce) up 11 per cent this quarter and set for the biggest such gain since the period to December 2009. Volumes for the benchmark contract on the country’s largest cash gold market were 3,267 kg yesterday, from 2,915 kg on September 21.
Cash silver rose as much as 0.6 per cent to $33.95 an ounce and was at $33.9025. The metal is set for a quarterly gain of 23 per cent, the best since the three months to December 2010.
Spot platinum gained for a second day, climbing 0.5 per cent to $1,636.50 an ounce. The metal is up 13 per cent since the end of June as labour disputes halted supplies in South Africa, the world’s largest producer. ETP holdings tracked by Bloomberg were at a record 47.438 tonnes yesterday.