Gold Advances to Highest Since November on Dollar as China Buys

Gold futures rose to the highest price since November as physical purchases from China and a weakening dollar spurred demand. Silver extended its longest winning streak in almost six months.

Gold is rebounding from its biggest annual drop since 1981 as global equities and emerging markets weakened and lower prices spurred physical buying. Chinese consumers returned from the week-long Lunar New Year holiday on Feb. 7. Volume for Shanghai’s benchmark bullion spot contract surged to a nine-month high yesterday and was above this year’s average today. Sales of American Eagle gold coins by the U.S. Mint rose 63 percent in January to the highest since April.

The Bloomberg Dollar Spot Index, a measure against 10 major currencies, reached a four-week low before Janet Yellen delivers her first testimony to U.S. lawmakers since being sworn in as Federal Reserve chairman. Gold’s 30-day correlation coefficient to the dollar gauge strengthened to -0.4 compared with -0.28 on Jan. 7, with a figure of minus 1 meaning the two always move in opposite directions.

“Physical demand is starting to pick up,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “The market is waiting for Yellen’s testimony today” and a weaker dollar helped support gold, he said.

Bullion for April delivery advanced 0.9 percent to $1,285.70 an ounce by 8:04 a.m. on the Comex in New York. It reached $1,288.30, the highest since Nov. 18, and is up for a fifth day in the longest streak since August 2012. Futures trading volume was 8 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Gold for immediate delivery climbed 0.9 percent to $1,286.64.

Mint Sales

Sales of gold coins and minted bars from Australia’s Perth Mint increased 10 percent to 64,818 ounces last month, it said Feb. 3. The U.S. Mint sold 10,000 ounces of coins so far in February, data from the mint show.

Holdings in gold-backed exchange-traded products rose 1 metric ton, the most since Jan. 29, to 1,738 tons yesterday, data compiled by Bloomberg show. Assets reached the lowest since October 2009 last month. The Fed said last month it will cut monthly bond purchases by $10 billion to $65 billion.

Silver for delivery in March rose 0.3 percent to $20.175 an ounce, and a seventh successive daily advance would be the longest since Aug. 16. Palladium for delivery in the same month gained 0.8 percent to $722.40 an ounce. Platinum for April delivery increased 0.4 percent to $1,391.50 an ounce.

Talks to end a strike over pay in South Africa that has crippled production at the world’s largest platinum mines have been postponed until Feb. 13 after the companies requested more time. The Association of Mineworkers and Construction Union has called out more than 70,000 workers on a strike that has cost employers about $18 million a day since Jan. 23.

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