Gold to rebound as China optimism offsets Europe concern
Gold may climb for the first time in three days as optimism that China will support its economy overshadowed concern European leaders won't be able to stem the region's debt crisis. Silver gained.
Spot gold was little changed at $1,560.95 an ounce at 10:43 a.m. in Singapore, after swinging between gains and losses. It dropped to a one-week low of $1,533.70 yesterday, before trimming losses as data showed demand for new U.S. homes rose more than forecast in April, with sales of previously owned homes rising in every region in the same period.
Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, expanded to 1,268.15 metric tons yesterday, after sliding 17.5 tons on May 22, the biggest such drop since Aug. 24, according to figures on the company's website. China's leaders pledged to intensify ''fine-tuning'' of policies, the government said on its website yesterday, building on Premier Wen Jiabao's comments published May 20 showing a bigger focus on bolstering growth.
''Early signs of a U.S. recovery, a slowdown in Chinese growth, question marks over U.S. monetary policy and a sovereign debt crisis brewing in Europe all keep the market in wait-and- see mode,'' Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today. "Any of these four catalysts can drive prices and investment demand.''
June-delivery bullion rose for the first day in four after dropping by the most in two weeks yesterday on the Comex in New York. It gained as much as 1 percent to $1,563.30 an ounce and last traded at $1,560.90. European leaders clashed over joint debt sales at a summit yesterday as new French President Francois Hollande challenged the deficit-cutting orthodoxy. Germany has "huge difficulties'' with France's call for joint borrowing by euro governments, said Chancellor Angela Merkel.