Gold Is Near Five-Week High as Stocks to Economy Weighed

Gold was little changed below a five-week high in London as investors weighed rebounding equities and signs of a global economic slowdown. Palladium rose, after yesterday approaching a bear market.

European shares rebounded today, after eight days of losses. The Bloomberg Dollar Spot Index rose. The Federal Reserve should consider delaying the end of its bond-purchase program to halt a decline in inflation expectations, St. Louis Fed Bank President James Bullard said yesterday.

Gold erased this year’s gains earlier this month on the outlook for higher borrowing costs as the U.S. economy improves. Bullion has since rebounded as the Fed signaled a worldwide economic slowdown may delay interest-rate increases and as equities to commodities slid. Platinum and palladium fell this week on concern industrial demand for the metals will weaken.

“The precious complex is taking its lead from the dollar and the stock markets at the moment,” David Govett, head of precious metals at Marex S

pectron Group in London, said in a note today. While “gold reacted mildly positively” to Bullard’s comments, Govett recommended selling bullion on any rallies to $1,250 an ounce, unless the dollar weakens further.

Gold for immediate delivery fell 29 cents to $1,238.52 an ounce by 9:41 a.m. in London, according to Bloomberg generic pricing. Bullion reached $1,249.75 on Oct. 15, the highest since Sept. 11, and is up 1.3 percent this week. Gold for December delivery fell 0.2 percent to $1,238.80 on the Comex in New York.

Trading Volume
Futures trading volume was 26 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Bullard said yesterday that U.S. economic fundamentals remain strong, and said recent financial-market turmoil was triggered by downgrades to the outlook for Europe. Rising interest rates reduce gold’s allure because the metal generally only offers investors returns through price gains, while a stronger dollar typically cuts demand for a store of value.

Silver for immediate delivery added 0.1 percent to $17.4176 an ounce in London. Platinum rose 0.7 percent to $1,255.50 an ounce, after dropping below gold yesterday for the first time since April 2013. Palladium gained 0.3 percent to $744.80 an ounce. Yesterday, prices settled 18 percent below a 13-year closing high set Sept. 1, approaching a 20 percent drop that meets the common definition of a bear market.

Platinum-group metals had been “sold on the back of stock market weakness and perceived global growth slowdown,” Marex Spectron’s Govett wrote. “Palladium, as the main element in catalytic convertors, is being especially hit as the perception that car sales will drop gathers momentum. ”

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