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Gold Extends Rally Above $1,300 as Investors Boost Metal Holding

Feb. 14 (Bloomberg) -- Gold headed for the biggest weekly advance since August as U.S. economic data that trailed estimates increased haven demand, with holdings in the biggest exchange-traded product expanding to an almost two-month high. Silver was set for the longest rally since March 2008.

While the prospect of a reduction in asset purchases by the Federal Reserve helped spur a 28 percent slump in gold in 2013, the cuts to stimulus that began in January hurt emerging-market stocks and currencies and increased gold’s appeal as a haven. Bullion advanced 9.5 percent this year on concern that U.S. growth may be stalling and as the MSCI All-Country World Index of equities retreated 1.3 percent.

“Gold got seriously hammered last year, and with the stock markets not performing as well as expected, some investors are reconsidering their allocation to gold,” Wallace Ng, a Shanghai-based trader at Gemsha Metals Co., said in an interview. “Physical demand this week has been good.”

Gold futures for April delivery rose 1.3 percent to $1,316.90 an ounce at 7:14 a.m. on the Comex in New York. Prices headed for a 4.3 percent weekly gain, the biggest such increase since the week ended Aug. 16. In London, gold for immediate delivery climbed 1.1 percent to $1,317.15 an ounce after touching $1,319.75, the highest price since Nov. 7.

Gold has traded above the 100-day moving average since Feb. 10, and is heading for a close above the 200-day moving average for the first time since February 2013.

U.S. retail sales fell in January by the most since June 2012, while jobless claims unexpectedly climbed last week, data showed yesterday. Stimulus will be cut in measured steps, Fed Chair Janet Yellen said on Feb. 11, while reiterating that the purchases aren’t on a preset course.

SPDR Expands

Assets in the SPDR Gold Trust expanded 1.2 percent to 806.35 metric tons, the highest since Dec. 20. Assets in the biggest ETP backed by gold, which shrank 41 percent last year, are up 1.2 percent this week, headed for a third weekly advance.

Gold’s advance this year hasn’t deterred analysts at Goldman Sachs Group Inc., who this week restated a forecast for lower prices. The metal will drop to $1,050 by the end of the year, analysts led by Jeffrey Currie said in a report, citing expectations for improving U.S. growth.

Gold’s rally has been driven in part by “very, very strong” physical demand, Greg Robinson, chief executive officer of Newcrest Mining Ltd., Australia’s biggest producer, said today on a media call. His counterpart at largest gold miner Barrick Gold Corp., Jamie Sokalsky, said yesterday he is more optimistic prices have bottomed amid reports of Chinese demand and slowing ETP sales.

Largest Consumer

China probably overtook India as the largest consumer last year as import restrictions curbed demand in the South Asian nation. A lack of investment alternatives in China, and futures that are 32 percent below the record $1,923.70 in September 2011, spurred purchases in the second-largest economy, said Liu Xu, a Beijing-based analyst at Capital Futures Co.

Silver futures for March delivery rose 3.1 percent to $21.025 an ounce in New York, after touching $21.13, the highest since Nov. 12. Prices have risen for 10 days and are up 8.6 percent this year after tumbling 36 percent in 2013. In London, silver added 2.7 percent to $21.053 an ounce.

Platinum for April delivery gained 0.7 percent to $1,425.90 an ounce, heading for a sixth straight gain, the longest winning streak for a most-active contract since December. Palladium for March delivery rose 0.6 percent to $735.25 an ounce in New York.

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