Gold Climbs Over $940 in Asia, Heading for Third Quarterly Gain

By Glenys Sim

June 30 (Bloomberg) -- Gold climbed above $940 an ounce in Asia, heading for a third quarterly increase, as the weakening dollar fueled demand for the precious metal as a store of value.

Bullion, which typically moves inversely to the U.S. currency, has climbed 2.4 percent in the quarter, while the dollar fell against all 16 major currencies as increased investor risk appetite spurred demand for higher-yielding assets. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a second day at 1,125.74 metric tons yesterday.

“The main driver of gold at the moment is moves in the U.S. dollar and its impact on Comex and over-the-counter investors,” John Reade, UBS AG’s head metals strategist, said in an e-mail. “Exchange-traded fund flows remain subdued, jewelry demand is weak, coin and investment bar buying is subdued.”

Gold for immediate delivery gained 0.4 percent to $941.42 an ounce at 9:40 a.m. in Singapore. The metal is up 6.7 percent this year as longer-term inflationary expectations boosted demand for a hedge against accelerating consumer prices. Gold futures for August delivery were little changed at $941.30 an ounce on the New York Mercantile Exchange’s Comex division, up 1.8 percent this quarter.

“Latest positioning data indicates that speculators have reduced net-long positions in the market significantly, which should limit downside risks somewhat,” Stefan Graber, analyst at Credit Suisse Group in Singapore, said in a note today. “As long as the important support at $925 holds, the short-term outlook remains positive.”

Net-long positions in New York gold futures decreased by 5 percent in the week ended June 23, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 166,294 contracts in New York.

Silver climbed 0.8 percent to $13.9775 an ounce, up 7.8 percent since March 31 and heading for second quarterly increase.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net