Paulson favors the metal even after his Gold Fund saw declines of about 47 percent this year, according to two people familiar with the matter. Paulson & Co. is the biggest investor in the SPDR Gold Trust, the largest bullion ETP. The metal helps diversify portfolios, BlackRock’s Kapito said in an interview with Tom Keene on “Bloomberg Surveillance.” Kapito said he would “still be a buyer of these short-term technical blips.” BlackRock is the top investor in the iShares Gold Trust.
India, China
Physical demand for gold drove an 8 percent gain in prices from a two-year low on April 16. Indian imports reached more than 100 tons in April, now valued at $4.7 billion, and shipments probably will top that again this month, according to refiner MMTC-PAMP India Pvt. The country’s gold imports were 860 tons last year, the London-based World Gold Council estimates. Consumption in China rose 26 percent in the first quarter from a year earlier, the China Gold Association said May 7.
Gold surged 62 percent since the end of 2008 as the Fed was joined by central banks in Europe and Japan in printing unprecedented amounts of money, almost doubling sovereign debt to more than $23 trillion, a Bank of America index shows. Twelve analysts surveyed by Bloomberg expect prices to rise this week, with 10 bearish and five neutral.
‘Lining Up’
“People are still lining up in China and India to buy the physical gold,” said John Kinsey, who helps manage about C$1 billion at Caldwell Securities Ltd. in Toronto. “Europe has got a stimulus program. The U.S. has a stimulus program. Japan has a stimulus program. You’d think there would be huge inflation coming with all this debt that’s being printed.”
Even as economists at Morgan Stanley and Credit Suisse Group AG predict policy makers will keep deploying stimulus, consumer prices have remained stable. Inflation expectations as measured by the break-even rate for five-year Treasury Inflation Protected Securities on April 18 reached the lowest since November.
Deutsche Bank AG cut its outlook for this year’s average gold prices by 6.4 percent to $1,533 on May 10. That would be the lowest annual average since 2010. The bank said last month the metal could drop to as low as $1,050.
Funds raised wagers on costlier crude oil by 5.5 percent to 204,534 contracts, the highest in five weeks, the CFTC data show. Investors trimmed bets on declining copper prices to a net-short position of 16,798, from 23,368 a week earlier.
Farm Bets