Gold Swings After Biggest Gain in Week as Investors Cut Holdings

Bloomberg (09/7) -- Gold swung after advancing the most in a week as investors lowered holdings in the largest bullion-backed exchange-traded product and the U.S. dollar strengthened amid speculation the Federal Reserve will scale back stimulus.

Spot gold climbed as much as 0.4 percent to $1,242.52 an ounce, after falling 0.3 percent, and traded at $1,240.03 by 9:33 a.m. in Singapore Prices climbed 1.1 percent yesterday, the most since July 1, as the Dollar Index declined from a three-year high. Assets in the SPDR Gold Trust fell 15 metric tons yesterday, the most in two weeks. Holdings stood at 946.96 tons, the least since February 2009.

Gold has dropped 8.2 percent since June 19, when Fed Chairman Ben S. Bernanke said the central bank may reduce its $85 billion of monthly asset purchases this year and end the program in 2014 as the economy improves. Alcoa Inc. kicked off the U.S. earnings season yesterday, reporting earnings that beat analysts’ estimates and fueling increased optimism about growth.