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GOLD TOPS $1,200 IN RALLY TO TWO-WEEK HIGH; RUSSIA ADDS RESERVES

By Debarati Roy and Nicholas Larkin - 11/18/2014
1:53 PM

Nov. 18 (Bloomberg) -- Gold futures climbed to a two-week high topping $1,200 an ounce after Russia added to reserves, fueling speculation that a rebound in demand for bars, coins and jewelry will help stem this year’s drop.

Russia’s central bank bought about 150 metric tons of gold this year, Governor Elvira Nabiullina told lawmakers today. That’s almost double 2013 purchases of 77 tons, International Monetary Fund data show. It indicates the nation bought 35 tons since the end of September. Gold prices fell 3.3 percent last month, touching a four-year low of $1,130.40 on Nov. 7.

As futures head for the first two-year slump in more than a decade, buyers for physical metal are emerging. Central banks may increase purchases by as much as 22 percent in 2014, the World Gold Council estimates. In the third quarter, global demand fell to the lowest in almost five years.

“The fact that Russia is buying more gold instead of diversifying into another currency or buying more dollars is a big positive,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview.

Gold futures for December delivery climbed 1.1 percent to close at $1,197.10 at 1:52 p.m. on the Comex in New York. The price reached $1,204.10, the highest for a most-active contract since Oct. 30.

Prices also climbed today as the dollar fell against a basket of 10 currencies, boosting demand for alternative assets.

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Wonder if Russia is just trying to cause a rally to affect the dollar??? Would not put it past them...