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Gold Rises From One-Week Low as Palladium Near 33-Month High

May 22 (Bloomberg) -- Gold rose from its lowest level in more than a week in New York after India eased some curbs on bullion imports and investors weighed Federal Reserve minutes. Palladium futures were near a 33-month high.

Bullion fell as much as 0.9 percent yesterday, before paring some of the losses, as Federal Reserve minutes showed policy makers said continued stimulus to push unemployment lower doesn’t risk sparking an undesirable jump in inflation, while some members said the Fed should communicate its strategy more clearly as it moves closer toward increasing interest rates.

India was replaced by China as the biggest gold user last year after the government curbed imports. Inbound shipments will probably rise after the Reserve Bank of India allowed more firms to buy metal from overseas, said Bachhraj Bamalwa, a director with the All India Gems & Jewellery Trade Federation. Palladium climbed 16 percent this year as a strike in South Africa cut supply and as U.S. and European leaders threatened top supplier Russia with sanctions over the Ukraine standoff.

“The Indian government made its first move towards loosening the restriction on importing gold, albeit a very small one,” David Govett, the head of precious metals at Marex Spectron Group in London, wrote today in a report. “This has helped underpin the price, but we will need a lot more before Indian imports can reach the heady heights of 2012 and 2013. Platinum and palladium will continue to be supported with the ongoing situation in South Africa and the Ukraine.”

Gold Price

Gold for August delivery rose 0.8 percent to $1,298 an ounce by 7:50 a.m. on the Comex in New York. It reached $1,283.30 yesterday, the lowest since May 12. Futures trading volumes were 9 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery gained 0.4 percent to $1,297.70 in London, according to Bloomberg generic pricing.

India still levies a 10 percent import duty on bullion and requires importers to supply 20 percent of their purchases to jewelers for export. The central bank allowed star and premier trading companies approved by the Directorate General of Foreign Trade to import gold under the 20:80 regulation, it said yesterday. The RBI also eased some financing rules allowing banks to give gold metal loans to jewelers.

Indian imports may expand by 10 metric tons to 15 tons a month, Bamalwa said, without giving total monthly numbers. Imports could double in the next few months, Australia & New Zealand Banking Group Ltd. said today in a report.

The Fed pared its monthly asset buying to $45 billion in April, its fourth straight $10 billion cut. Bullion climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero.

ETP Holdings

Holdings in gold-backed exchange-traded products fell 4.1 tons to 1,716 tons yesterday, the lowest since October 2009, data compiled by Bloomberg show. Platinum- and palladium-backed assets reached records yesterday. Holdings and prices gained this year as mine workers have halted work since January in South Africa, the biggest producer of platinum and second- largest for palladium.

Palladium for June delivery added 0.4 percent to $834 an ounce in New York. It climbed to $834.50 yesterday, the highest since August 2011. Platinum for July delivery rose 0.6 percent to $1,483.30 an ounce. Silver for July delivery gained 0.9 percent to $19.582 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net John Deane

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