Gold Weakens for Second Straight Day as Demand Declines, Dollar Advances
July 6 (Bloomberg) -- Manpreet Gill, Singapore-based strategist for Asia at Barclays Wealth, talks with Bloomberg's Rishaad Salamat about his investment strategy for gold and other commodities. Gill also discusses the outlook for the Australian dollar and stocks, and South Korean equities. (Source: Bloomberg)
Gold may weaken for a second day on speculation that investment demand is slowing after the metal failed to extend its rally to a record.
Bullion for immediate delivery fell as much as 0.5 percent to $1,203.15 an ounce before trading at 1,207.75 an ounce at 1:35 p.m. in Singapore. August-delivery futures were little changed at $1,208.10 an ounce in New York.
“People are testing the bottom of the gold to find support,” said Ellison Chu, a Hong Kong-based metals manager with Standard Bank Asia Ltd. “Trading is still quiet.”
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, dropped for a second day, declining 0.3 metric tons to 1,318.91 tons on July 2, according to the company’s website. The dollar strengthened 0.3 percent against a basket of six major currencies before declining 0.1 percent.
“Gold needs a fresh catalyst,” Mark Pervan, head of commodity research with Aautralia and New Zealand Banking Group Ltd., wrote in a report today. “The longs were clearly disappointed prices couldn’t breach fresh record highs and may decide that prices have peaked for now.” Long positions are bets that prices will rise.
Gold touched $1,196.65 an ounce last week, the lowest level since May 25, after climbing to a record $1,265.30 on June 21. The metal has risen 10 percent in 2010, keeping it on course for a 10th annual gain, as investors seek to preserve their wealth from declining currencies, including the euro.
“With gold touching its lowest close in over a month, we see these levels as a good entry point for fresh long positions,” Hussein Allidina, head of commodity research at Morgan Stanley, wrote in a report today.
Silver for immediate delivery was little changed at $17.815 an ounce, while platinum lost 0.2 percent to $1,501.85 an ounce. Palladium gained 0.6 percent at $431.45 an ounce.
To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net
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