Gold in Asia Heads for Biggest Quarterly Advance in 25 Years

Gold headed for the biggest quarterly advance since September 1990 as demand for haven assets surged to make the metal one of this year’s best performing commodity.

Bullion for immediate delivery rose as much as 0.3 percent to $1,228.96 an ounce, and traded at $1,226.96 at 11:21 a.m. in Singapore, according to Bloomberg generic pricing. The metal is up 16 percent this quarter, the first quarterly advance since June 2014.

Gold rallied this year as it cemented its status as a store of value amid financial market turbulence and concern about the global economy, which led to speculation that the Federal Reserve would pause on tightening monetary policy in the U.S. A gauge of the U.S. currency headed for the biggest quarterly loss since 2010 after Fed Chair Janet Yellen said Tuesday the central bank will act “cautiously” as it looks to withdraw monetary stimulus. Investor holdings in Exchange -traded products have expanded by about 300 metric tons this quarter, the most since March 2009.

“The dovish remarks by Yellen earlier this week which reinforced the Fed’s stance to proceed gradually and cautiously with rate hikes this year have weighed on the U.S. dollar index, which is a positive for gold prices,” Vyanne Lai, an economist at National Australia Bank Ltd., said by e-mail. “Investment demand for gold appears to be holding up despite the amelioration in global financial market Volatility , with the flows into gold ETFs maintaining a robust pace.”

• Traders now see no chance of a change in Fed policy next month and only a 54 percent likelihood of an interest rate increase by December. Higher borrowing costs curb the appeal of bullion against interest-bearing assets.
• In China, bullion of 99.99 percent purity lost as much as 1.3 percent to 255.30 yuan a gram ($1,227.93 an ounce) on the Shanghai Gold Exchange.
• In other precious metals, spot silver was little changed at $15.22 an ounce, paring the quarterly gain to 9.9 percent. Platinum added 0.1 percent to $963.50 an ounce and is up 8.1 percent this quarter, the most since the three months ended September 2012.

To contact the reporter on this story: Ranjeetha Pakiam in Singapore at rpakiam@bloomberg.net. To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, Alexander Kwiatkowski, Sungwoo Park

By: Ranjeetha Pakiam

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