Billionaire Paulson Sticks With Gold Wager as Prices Rebound

 Billionaire hedge fund manager John Paulson, who cut his gold holdings by more than half in the second quarter, maintained his bet on the metal over the next three months as prices rebounded.

Paulson & Co., the largest investor in the SPDR Gold Trust, the biggest exchange-traded product for the metal, held 10.23 million shares as of Sept. 30, unchanged from June 30, according to a government filing yesterday. Billionaire George Soros took a stake in the Market Vectors Gold Miners ETF.

Global bullion demand tumbled 21 percent last quarter as investors pulled 118.7 metric tons out of ETFs and similar products, World Gold Council data show. Prices that fell into a bear market in April have rebounded 9.1 percent since reaching a 34-month low on June 28 as purchases of coins and jewelry rose. The metal is still headed for its first annual loss since 2000 as equities rallied and inflation failed to accelerate after the Federal Reserve’s unprecedented money printing.

Gold futures in New York declined 23 percent this year to $1,286.30 an ounce, outpacing the 4.6 percent drop for the Standard & Poor’s GSCI Spot Index of 24 commodities. The MSCI All-Country World Index of equities climbed 17 percent, and the Bloomberg Dollar Index gained 3.3 percent. The Bloomberg U.S. Treasury Bond Index declined 2.6 percent.

(Source: Bloomberg)

Gold Advances After Yellen Backs Easing Until Economy Improves

Gold climbed for a second day after Federal Reserve Chairman nominee Janet Yellen backed stimulus until the economy and labor market improves, reducing concern the central bank’s bond-buying program will soon be scaled back. Silver rebounded from the lowest level since August.

Bullion for immediate delivery rose as much as 0.4 percent to $1,287.01 an ounce, and was at $1,284.66 at 8:49 a.m. in Singapore. Prices rose 1.1 percent yesterday, the most since Oct. 22, as the Bloomberg U.S. Dollar Index lost 0.4 percent. The measure of the greenback’s value against 10 currencies fell 0.2 percent today, trimming this year’s advance to 3.1 percent.

Gold lost 23 percent in 2013 as signs of recovery spurred speculation that the Fed will start to cut the $85 billion of monthly bond buying, strengthening the dollar. Yellen said in testimony prepared for her nomination hearing today before the Senate Banking Committee that the economy and labor market are performing “far short of their potential” and must improve before the central bank can begin reducing monetary stimulus.

Gold for delivery in December gained as much as 1.4 percent to $1,286.50 an ounce on the Comex, before trading at $1,284 and ending a five-day losing streak that was the longest since the six days through Aug. 6. Trading volume was 8 percent above the average for the past 100 days at this time.

In China, the second-largest consumer, volumes for cash gold of 99.99 percent purity on the Shanghai Gold Exchange climbed to 15,413 kilograms yesterday, the most since Oct. 11.

(Source: Bloomberg)

Euro Holds Gain Versus Peers Before ECB; Aussie Drops on Jobs

 The euro held yesterday’s gain against most major peers before European Central Bank policy makers meet today amid speculation the region’s economy isn’t fragile enough to warrant an interest-rate cut.

The euro yesterday halted a five-day drop against nine developed market counterparts tracked by Bloomberg Correlation Weighted Indexes, with ECB President Mario Draghi scheduled to speak after the bank’s decision. A gauge of U.S dollar strength remained lower, after falling yesterday, before data that may show an expansion in U.S. gross domestic product slowed last quarter. Australia’s dollar dropped against its 16 major peers after employment rose less than economists predicted.

The euro traded at $1.3503 at 9:54 a.m. in Tokyo, after yesterday rising 0.3 percent to $1.3513. The common currency fetched 133.29 yen from 133.31. The dollar was little changed at 98.72 yen. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major currencies, was at 1,014.84 after dropping 0.3 percent to 1,013.48 yesterday.

The ECB will leave its main refinancing rate at a record low 0.5 percent today, according to 67 of 70 economists surveyed by Bloomberg News. Bank of America Corp., Royal Bank of Scotland Group Plc and UBS AG predict the central bank will reduce borrowing costs by 25 basis points.

(Source: Bloomberg)

Commodities Tumble to Four-Month Low as Crude, Gold Lead Losses

 Commodities dropped to a four-month low, paced by declines in crude oil and gold, on signs of climbing supplies of raw materials at a time when the prospect of reduced Federal Reserve stimulus may cut demand.

The Standard & Poor’s GSCI Spot Index of 24 raw materials lost 1.7 percent to settle at 612.24 at 4 p.m. in New York, after touching 611.58, the lowest since July 1. West Texas Intermediate fell below $95 a barrel for the first time since June. Gold reached a two-week low. Hog futures capped the longest slump in three months, and cotton slumped to the lowest since January.

Production is poised to top demand for everything from coffee to zinc as ample rains this year boosted global crops and demand waned for metals, grains and energy. U.S. crude inventories climbed to the highest since June, data from the Energy Information Administration showed Oct. 30. Commodity returns will be “mostly flat” in the next 12 months, and there are “significant downside opportunities” in gold, copper and soybeans, Goldman Sachs Group Inc. said Oct. 18.

The Fed signaled diminishing concern over higher borrowing costs and cited “underlying strength” in the economy, even as it maintained $85 billion in monthly bond purchases on Oct. 30. The central bank’s statement opens the possibility of reduced debt buying as soon as December, Citigroup Inc. and Barclays Plc has said.

(Source: Bloomberg)