Gold headed for the first weekly advance in seven as signs of increased demand in China outweighed concern that an end to stimulus in the U.S. this year will bolster the dollar. Yen-priced bullion rallied to a record and platinum was set for the best week since September.
Spot gold was at $1,674.05 an ounce by 3:18 p.m. in Singapore, after declining as much as 0.3 percent to $1,671.25. The metal is 1.1 percent higher this week, set to end the worst run of weekly losses since 2004. The price touched $1,678.81 yesterday, the highest level since Jan. 3.
Data this week showed China’s total export growth almost tripled analysts’ estimates, net gold imports rose to a seven- month high in November, while volumes jumped on the Shanghai Gold Exchange, the country’s largest cash bullion bourse. Demand typically picks up before Christmas and lasts through the Lunar New Year in February. Consumer prices in China gained 2.5 percent last month, exceeding analysts’ estimates.
“Chinese demand is shaping up to be strong during this peak season,” said Xiang Nan, an analyst at CITICS Futures Co., a unit of China’s biggest listed brokerage. “Gold has benefited from loose monetary policy and economic stimulus, and as long as global data doesn’t show much improvement this remains in place as a driver of prices.”
Gold has rallied 2.9 percent since slumping on Jan. 4 to the lowest level since August after the Federal Reserve released minutes that showed policy makers debated an end to bond purchases this year. Bullion capped a 12th annual advance in 2012 as central banks took steps to stimulate their economies.
The metal for December delivery jumped 2.2 percent to a record 4,820 yen a gram ($1,679.51 an ounce) in Tokyo as investors sought to hedge against a weakening yen. Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds.
Gold for February delivery slipped 0.3 percent to $1,673.10 an ounce on the Comex in New York, after jumping the most in two months yesterday. Futures are also poised for the first weekly gain in seven as Japan’s government pledged 10.3 trillion yen in spending to drive a recovery and European Central Bank President Mario Draghi said economic weakness in the region will continue.
Spot platinum gained as much as 0.4 percent to $1,637 an ounce, the highest since Dec. 12, and is up 5 percent this week in the best showing since Sept. 14. One ounce of platinum bought as much as 0.9787 ounce of gold today, the most since April. The ratio has risen for nine days, the longest period of advances since April 2009.
Palladium fell 0.2 percent to $701.40 an ounce, paring a weekly increase. Cash silver declined 0.2 percent to $30.785 an ounce, set for a third weekly advance, the longest period of gains since September.