Azernews.Az

By Bloomberg

Gold advanced for the first time in seven days after plunging to the lowest in five years on Monday.

Bullion for immediate delivery added as much as 0.9 percent to $1,105.99 an ounce before trading at $1,103.85 at 12:18 p.m. in Singapore, Bloomberg generic pricing shows. The metal fell to $1,086.18 a day earlier, the lowest since March 2010.

Gold rallied after slumping the most in two years on Monday, triggering losses in commodities and related equities. Investors are bearish as the Federal Reserve moves closer to raising rates, curbing demand for gold which generally offers returns through price gains, and after China’s central bank bought less bullion than expected. Futures on the Comex in New York are heading for their longest losing run since 2008.

“Any rebound today is purely technical and would probably be just a ‘dead cat bounce’,” said Howie Lee, an investment analyst at Phillip Futures Pte in Singapore, referring to a temporary recovery. “The bleeding may stop in the meantime but that doesn’t mean the wound has closed.” He expects prices to stabilize around $1,100 in the short-term.

Futures fell 0.4 percent to $1,102.70 an ounce, heading for a ninth day of losses, the worst run since Sept. 11, 2008, four days before Lehman Brothers Holdings Inc. filed for bankruptcy. Two of the three gold options attracting the most volume on the Comex on Monday were wagers on further declines.

More Losses

Assets in the SPDR Gold Trust dropped on Monday to the lowest since 2008, while speculators are holding the smallest net-bullish bet since U.S. government data begin in 2006. Almost $2.7 billion was erased from exchange-traded products tracking precious metals last week, the most since March.

The rout has some analysts expecting more losses. Oversea- Chinese Banking Corp.’s Barnabas Gan, the most accurate forecaster of precious metals in rankings compiled by Bloomberg, predicts gold will reach $1,050 by December.

Newcrest Mining Ltd., Australia’s biggest producer, slumped 1.9 percent on Tuesday, extending a 10 percent drop a day earlier in Sydney.

“There seems to have been a breakdown over the last 48 hours that’s unusual, in that the normal catalysts don’t seem to be there,” said Jake Klein, executive chairman of Evolution Mining Ltd., Australia’s third-biggest producer by market value.

A tumbling U.S. dollar price is “going to create a significant shift in ownership over the next couple of years,” Klein said on a call. “If you’re a U.S.-dollar denominated gold producer and gold is at $1,100 an ounce, you’re sweating.”

Bullion of 99.99 percent purity fell 1 percent to 221.30 yuan a gram on the Shanghai Gold Exchange, above the low of 219 yuan reached on Monday.

Spot silver advanced 0.4 percent to $14.7725 an ounce, after declining as much as 2.3 percent on Monday. Platinum retreated 0.3 percent to $975.50 an ounce after dropping to the lowest since 2009 on Monday. Palladium was little changed at $605.25 an ounce.