Dec. 9 (Bloomberg) -- Gold rose for the first time in three sessions in New York on speculation that demand for jewelry, bars and coins may increase and as a weaker dollar boosted the appeal of the metal as an alternative investment.
Physical demand “will likely pick up after the recent price drop and ahead of the Chinese New Year” at the end of January, Dublin-based brokerage GoldCore Ltd. said today in a report. Gold touched $1,210.10 an ounce on Dec. 6, the lowest since July 5, amid concern that the Federal Reserve will curb stimulus as U.S. growth improves. The dollar fell as much as 0.2 percent against a basket of 10 major currencies.
“The weaker dollar is having an impact,” Jonathan Guyer, a portfolio manager at Arrow Investment Advisors LLC in Olney, Maryland, which oversees $650 million, said in a telephone interview. “Physical demand for gold has been good.”
Bullion futures for February delivery gained 0.4 percent to settle at $1,234.20 at 1:49 p.m. on the Comex in New York. Trading was 54 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Gold for delivery in January closed at $1,234.90 on the Comex, a premium to the February contract that reflects current physical demand for the metal, Guyer said.
Bullion is set for the first annual drop in 13 years. Some investors lost faith in the metal as a store of value. The Federal Reserve may begin reducing the $85 billion in its monthly bond buying at a Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 poll.
U.S. data showed Dec. 6 the jobless rate dropped to a five-year low of 7 percent in November as employers added more workers than economists forecast.
“Speculative market participants and traders continue to fret over whether the United States will begin tapering,” GoldCore said in the report.
Holdings in gold-backed exchange-traded products fell 2.3 metric tons to 1,828.8 tons on Dec. 6, the lowest since February 2010, data compiled by Bloomberg show. Hedge funds and other speculators cut their bullish wagers on gold 16 percent to 26,774 contracts in the week ended Dec. 3, the lowest since June 2007, U.S. Commodity Futures Trading Commission data show.
Silver futures for March climbed 0.9 percent to $19.701 an ounce in New York.
On the New York Mercantile Exchange, platinum futures for January delivery gained 0.9 percent to $1,368.50 an ounce. Palladium futures for March delivery declined 0.2 percent to $735 an ounce.
--With assistance from Phoebe Sedgman in Melbourne and Glenys Sim in Singapore. Editors: Thomas Galatola, Millie Munshi