“Gold advanced for a second day in London on speculation that the biggest slump in three decades will spur increased purchases from investors and consumers. Futures declined in New York.
Bullion has lost 17 percent in 2013 after rising sixfold in a 12-year rally through last year. The metal slipped into a bear market on April 12 on speculation central banks in Europe may sell holdings to raise funds and that a U.S. recovery would spur the Federal Reserve to rein in stimulus. The 14 percent plunge in the two days through April 15 was the most since February 1983.
“If you look at the fundamentals, the drop was excessive and does not correspond to the reality that we still have a lot of troubles out there — debt monetization, real interest rates will remain in negative territory and the dollar in the long run still is a currency that won’t be that strong,” Dominic Schnider, head of commodities research at UBS AG’s wealth- management unit, said in a Bloomberg Television interview. “Nevertheless, a lot of damage has been done.”
Gold for immediate delivery gained as much as 1.3 percent to $1,386.25 an ounce and was at $1,383.47 at 11:47 a.m. in London. Prices touched $1,321.95 yesterday, the lowest since January 2011. Bullion’s 14-day relative strength index was at 23.8, below the level of 30 that indicates to some analysts who study technical charts that a rebound may be imminent….”
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