Gold climbs as buyers chase bullion bars, coins

REUTERS: US gold futures slipped more than 1% on Wednesday after investors dumped holdings of gold-backed exchange-traded funds and as the contract caught up with a recent sell-off in the cash market.

But lower prices could stir more purchases from physical buyers, with bullion falling about 17% so far this year after an unbroken 12-year string of gains.

Gold futures hovered near multi-year lows while spot gold rose slightly, although fears of central bank sales and tepid global growth continued to cast a pall over the market.

US gold futures for June delivery hit a session low of $1,365 and stood at $1,377.30 by 0108 GMT, down $10.10. They plunged to $1,321.50 on Tuesday, their lowest level since September 2010.

Spot gold climbed $8.77 to $1,376.56 an ounce, having slipped to $1,321.35 on Tuesday, its weakest since early 2011.

On Monday, gold recorded its biggest ever daily fall in dollar terms – catching gold bulls, speculators and veteran investors all by surprise.

“These days, gold moving by $10 is not really a big thing. I would think panic selling was over by yesterday, but it’s still not a normal market. People are still sensitive to movements in the market,” said a dealer in Tokyo.

“In Tokyo, we are seeing good physical demand. People are buying physical gold, kilobars. Physical buyers are looking at this dip as a chance to buy,” said the dealer, who pegged support at $1,350 an ounce for spot gold.

Consumers swooped to pick up gold in Asia after the precious metal slumped, although some buyers were waiting to see if prices might weaken even further as the outlook for bullion turns sour.

The typically safe-haven asset has failed to capitalise on tensions in the Korean Peninsula and has been hit by uncertainty over the US Federal Reserve’s stimulus program.

SPDR Gold Trust, the world’s largest gold-backed ETF, said its holdings fell 0.73% to 1145.92 tons on Tuesday from 1154.34 tons on Monday. Holdings of global gold ETFs were at their lowest in more than a year.