Gold rose to an eight-week high as a tumble in equity markets boosted demand for the metal as an alternative investment.
The MSCI All-Country World Index of stocks headed for the biggest drop in seven weeks. Global jewelry demand jumped 37 percent to 575.5 metric tons in the second quarter, and combined global bar and coin sales advanced 78 percent from a year earlier to an all-time high of 507.6 tons, with purchases more than doubling in India and China, the World Gold Council said in a report today.
"Some people are looking at gold as a flight-to-quality instrument with the big selloff in the equity markets," Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. "Physical demand is also supportive."
Gold futures for December delivery jumped 2 percent to $1,359.60 an ounce at 1:04 p.m. on the Comex in New York. Earlier, the price reached $1,363, the highest for a most-active contract since June 19.
Through yesterday, gold plunged 20 percent this year, entering a bear market in April as some investors lost faith in the commodity as an alternative investment amid a U.S. equity rally and low inflation. The value of global exchange-traded products backed by the metal plunged by $58 billion.
Billionaire John Paulson cut holdings in the SPDR Gold Trust, the biggest ETP, by 53 percent in the second quarter, a government filing showed yesterday. Soros Fund Management LLC and Daniel Loeb’s Third Point sold their entire stakes in the fund, separate filings showed.
Silver futures for September delivery advanced 3.5 percent to $22.545 an ounce on the Comex. Earlier, the price reached $22.62, the highest for a most-active contract since June 7.
--With assistance from Jeanna Smialek in Washington and Glenys Sim in Singapore. Editors: Thomas Galatola, Patrick McKiernan
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