Feb. 13 (Bloomberg) -- Gold traded near the highest level in three months as investors weighed prospects for further cuts to U.S. stimulus and signs of waning physical demand. Futures retreated to halt the longest run of gains since June 2012.
Bullion for immediate delivery rose and fell 0.2 percent, and traded at $1,289.33 an ounce at 2:50 p.m. in Singapore. Prices yesterday climbed to $1,296.32, the highest level since Nov. 8, sending the 14-day relative strength index to 66.3, near the level of 70 that signals to some analysts and investors who study charts that prices may reverse.
Data today may show U.S. retail sales stalled in January after Federal Reserve Chair Janet Yellen said on Feb. 11 that stimulus will be cut in measured steps, while reiterating that purchases aren’t on a preset course. Goldman Sachs Group Inc. reiterated a forecast for lower prices this year as the U.S. recovers and the Fed tapers bond-buying. Volumes for Shanghai’s benchmark spot contract fell for a second day yesterday.
“While some investors may be thinking of increasing their gold allocation, physical buyers retreat at higher prices,” Xue Na, an analyst at Nanhua Futures Co., said from Hangzhou. The $1,300 mark may be difficult to cross, Xue said.
Assets in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, were unchanged yesterday at 798.85 metric tons and haven’t declined since Jan. 23. Holdings are 0.1 percent higher this year after losing 41 percent in 2013.
Yellen’s second day of testimony to lawmakers, which had been scheduled for today, was postponed because of a snowstorm along the U.S. East Coast. Fed Reserve Bank of St. Louis President James Bullard said yesterday officials will probably be careful about altering the pace of their reductions to bond buying because of a potentially significant impact on markets.
Volumes for spot bullion of 99.99 percent purity on the Shanghai Gold Exchange have declined from a nine-month high of 25,725 kilograms on Feb. 10. Demand in China, which probably overtook India as the largest consumer last year, jumped 41 percent in 2013, the China Gold Association said this week.
Gold for April delivery fell as much as 0.5 percent to $1,288.20 an ounce on the Comex in New York and traded at $1,289.30, snapping a six-day advance.
Prices will drop to $1,050 an ounce by the end of the year, Goldman Sachs analysts wrote in a report yesterday, citing expectations for growth in the U.S. Further depreciation in emerging-market currencies may also hurt gold-jewelry demand in those countries, they wrote.
“The path will be more of a slow grind lower over the course of the year unlike last year as markets will wait for strong economic data to confirm that U.S. economic growth is accelerating and that the U.S. Federal Reserve will continue to reduce the accommodative monetary policy,” Goldman said.
Silver traded at $20.2188 an ounce from $20.2414 yesterday, when prices capped a ninth day for the longest period of advance since March 2008. Platinum dropped 0.5 percent to $1,399.75 an ounce, halting a four-day climb. Palladium slid 0.1 percent to $728.41 an ounce, snapping six days of gains that was the longest winning streak since July.
--With assistance from Phoebe Sedgman in Melbourne. Editors: Jake Lloyd-Smith, Ovais Subhani