Gold Caps Biggest Weekly Gain This Month as U.S. Confidence Sags

May 16, 2014 2:42 pm ET

May 16 (Bloomberg) -- Gold futures posted the biggest weekly gain this month as an unexpected decline in consumer confidence rekindled U.S. growth concerns, boosting demand for haven assets.

The Thomson Reuters/University of Michigan preliminary sentiment index decreased to 81.8 in May from 84.1 in April, data released showed today. The median projection in a Bloomberg survey of economists called for a gain to 84.5. The Standard & Poor’s 500 Index of stocks fell as much as 0.3 percent. Gold jumped 7.8 percent in the first four months of 2014 amid tension in Ukraine and concern that the U.S. economy was slowing.

“The mixed data out of the U.S. is helping gold,” Adam Klopfenstein, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview. “The flaring up of the Ukraine situation brought in some safe-haven bids earlier this week.”

Gold futures for June delivery fell less than 0.1 percent to settle at $1,293.40 an ounce at 1:41 p.m. on the Comex in New York. The metal rose 0.5 percent this week, the most since April 25.

The top U.S. and U.K. diplomats vowed to punish Russia with industrywide sanctions if this month’s Ukrainian presidential election is undermined, as the Kiev government’s forces moved to flush out separatists in the east.

ETP Holdings

Holdings in gold-backed exchange-traded products gained 2.3 metric tons to 1,723.1 tons yesterday, rising from the lowest since October 2009, data compiled by Bloomberg show. Billionaire hedge-fund manager John Paulson maintained his stake in the SPDR Gold Trust, the largest bullion ETP, at 10.23 million shares as of March 31. That was unchanged for a third straight quarter, a filing showed yesterday.

On the New York Mercantile Exchange, platinum futures for July delivery fell 0.3 percent to $1,466.10 an ounce, the second straight drop. Palladium futures for June delivery climbed 0.4 percent to $815 an ounce, rebounding from an earlier loss of as much as 0.9 percent, after Interfax reported Russia will start purchasing the metal. The price advanced to $829.20 two days ago, the highest since August 2011, and gained 1.9 percent this week.

Holdings in platinum ETPs reached a record yesterday and assets in palladium products were at an all-time high earlier this week, data compiled by Bloomberg show.

Members of the Association of Mineworkers and Construction Union have been on strike since Jan. 23 in South Africa, the top producer of platinum and the second-biggest for palladium. Production at the largest platinum mine will be paralyzed until at least the middle of the year even if the stoppage is resolved soon, Impala Platinum Holdings Ltd. said.

Silver futures for July delivery fell 0.8 percent to $19.329 an ounce on the Comex.

--With assistance from Phoebe Sedgman in Melbourne and Glenys Sim in Singapore.