Gold climbed for a sixth day, the longest run of gains in two months, on optimism that China’s decision to relax rules on trading the metal will help to increase investor demand.
Gold for immediate delivery strengthened as much as 0.8 per cent to $US1195.05 an ounce, before trading at $US1193.30. December-delivery futures advanced 0.7 per cent to $US1195.30 an ounce.
“It’s a good sign of opening up the market for more participants,” said Ng Chen Thye, a Singapore-based director at Standard Merchant Bank. “This will definitely boost volume in the gold market and demand will increase.”
China’s central bank said yesterday that it would let more banks import and export gold and allow overseas companies more access to trading. China may “increase foreign members on the Shanghai Gold Exchange and will also study ways to allow foreign qualified bullion suppliers to deliver to the exchange,” the People’s Bank of China said in a statement.
China is the world’s largest gold producer, and demand for the precious metal increased in the first half of this year as local equities declined and the government took steps to cool the property market, the Shanghai Gold Exchange said last month.
The dollar traded near a three-month low against the euro, boosting the appeal of the metal as an alternative investment. The US currency was at $US1.3232 per euro in Tokyo from $US1.3231 yesterday, when it slid to a three-month low of $US1.3262 on speculation that the Federal Reserve will take more credit-easing measures to revive its flagging economic recovery.
Physical purchases
Gold has strengthened 8.7 per cent this year and is set for its 10th annual advance, the longest winning streak since at least 1920, as investors sought protection against Europe’s financial turmoil and weaker currencies. The metal has dropped about 6 per cent since reaching a record $US1265.30 on June 21.
Demand for gold is not only “supported by the increasing physical purchases after the crisis and recent slide of the price, but also by the upcoming festival season in India and the Ramadan fasting month in Muslim countires,” Eugen Weinberg, head of commodity research at Commerzbank, wrote in a report.
Gold jewelry demand typically gains before holidays centered around Ramadan and the wedding season in India, the world’s largest gold user. The end of Ramadan, which runs until Sept. 9 this year, is traditionally a time for offering gifts.