Speculation Fed Decision Lift Gold

Gold Lift Speculation Fed Decision

Gold rose in London on speculation the Federal Reserve will continue its stimulus and after gold prices fell to the lowest in more than two weeks of increased physical demand.

Gold fell for a fourth day in the session yesterday, the worst performance since October. Minutes of the Fed meeting on December 11 to 12, released January 3 showed officials began debating ending bond purchases earlier this year. The central bank, which started its two-day meeting on Selalsa yesterday, will renew its commitment to asset purchases after determining the benefits of the program outweighs the risk of inflation or financial instability, according to economists surveyed by January 24 to 25.

Gold for February delivery rose 0.4 percent to $ 1,661.70 an ounce by mid-morning in London. Prices reached $ 1,652.09 an ounce yesterday, the lowest level since January 9. Gold for April delivery rose 0.5 percent at $ 1,663 on the Comex in New York.

Product gold ETF holdings fell for a third day yesterday, falling 1.7 metric tons to 2610.3 tons, data compiled by Bloomberg. The lowest number in two months and 0.8 percent below the record set on December 20.

In other trading, silver rose 0.5 percent to $ 31.0275 an ounce. Palladium was little changed at $ 738.50 per ounce level, after hitting $ 749 yesterday, the highest level since September 2011. Platinum rose 0.3 percent to $ 1,678 per ounce.

HK Shares End Flat, ICBC Falls 2.2%

Hong Kong shares ended flat on Tuesday yesterday, weighed by weakness in the Industrial & Commercial Bank of China Ltd. after Goldman Sachs cut its stake in China's biggest lender.

Blue-chip Index Hang Seng Index edged down 16.71 points, or 0.1%, to close at 23655.17, with ICBC in focus. The worst-performing blue chip, ICBC fell 2.2% to HK $ 5.82 after Goldman sold about U.S. $ 1 billion stake in the bank at HK $ 5.77 each.

Kim Eng said in a note that this is the fifth time that the Wall Street bank has cut its stake in ICBC since 2009, and interestingly, it was exactly one placement in each year from 2009 to 2012. The broker added that the placement price this time was the highest of the five release, although this is the smallest size of the deal.

"ICBC is currently trading at 7 times 2013 earnings and 1.3 times book value," and offers a dividend yield of about 5% in 2013, says Kim Eng, who recommends buying the stock on any weakness. Stock price impact of the release of the past by Goldman is "small and short-lived," he added.

Trading volume fell 11570000000 ICBC Hong Kong dollars (U.S. $ 1.5 billion) Tuesday accounted for 15% of the total market capitalization of HK $ 75.55 billion. Shares worth HK $ 67.50 billion traded Monday.

Chief operating officer at KGI Asia Ben Kwong said that China's A-share rally failed to stimulate the Hong Kong Tuesday, reflecting the mood of the more cautious among local investors. "Along with fundraising activities recently, we expect market consolidation will continue."

A-shares are traded Chinese stocks in Shanghai and Shenzhen. The Shanghai Composite Index ended up 0.5% Tuesday, above the 2.4% rally on Monday.

Defensive stocks outperformed, pointing to the pressure correction for the Hong Kong market. Blue-chip utilities trio CLP, HK & China Gas and Power Assets increased between 0.5% and 1.9%.

Analysts said some revolving fund for defensive names in anticipation of a market decline of short-term maturities given that the HSI does not have trading sessions so far in 2013 in which he reported a loss of more than 1.0%.

Elsewhere, Gome Electrical Appliances rose 1.1% to HK $ 0.96, ignoring the warning of the resulting loss of income to net sales of lower 2012 rates, rising rents and profitable e-commerce business enterprise.

Network operator China's second-largest retail home reported nine-month net loss of CNY687 million, the profit warning does not come as a surprise to investors.