Gold futures rose more than 1 percent Wednesday—the fourth gain in five sessions—as investor demand for coins surged amid a slump in exchange-traded products backed by the metal.
Britain’s Royal Mint sold more than three times the amount of coins this month than a year earlier after prices dropped the most in three decades, while the U.S. Mint ran out of its smallest American Eagle coin. Last week, futures plunged 7 percent, the most since September 2011, and ETP holdings headed for a record monthly plunge.
“Support for gold prices is coming from the cash market,” Jeffrey Friedman, a senior commodity broker at RJO Futures in Chicago, said in a telephone interview. “There’s still a bearish tone to things, but a lot of the weak longs have been flushed out. People who take physical delivery of gold tend to hold onto it for a while.”
Gold futures for June delivery climbed 1.1 percent to close at $1,423.70 an ounce at 1:39 p.m. on the Comex in New York. Since touching a 26-month low of $1,321.50 on April 16, the price has climbed 7.7 percent.
In 2013, futures have slumped 15 percent after 12 years of advances. Assets held in the SPDR Gold Trust, the largest ETP, tumbled yesterday to the lowest since October 2009. They have dropped 10 percent this month.
UBS AG said Tuesday that physical gold flows to India, the world’s biggest buyer, approached the highest since 2008, while Standard Chartered Plc said shipments last week were 20 percent above the previous record.
“The bounce in price-sensitive physical demand, especially in the emerging world, is impressive and has lifted prices,” Howard Wen, an analyst at HSBC Securities (USA) Inc., said in a report. “ETF selling remains the main obstacle to a more vigorous recovery.”
Silver futures for July delivery increased 0.1 percent to settle at $22.978 an ounce on the Comex after gaining as much as 2.2 percent. Trading on the exchange doubled compared with the 100-day average. The metal has declined 24 percent this year.
On the New York Mercantile Exchange, platinum futures for July delivery rose 0.9 percent to $1,430.80 an ounce.
Palladium futures for June delivery fell 0.8 percent to $667.65 an ounce.
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