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Gold May Fall in New York as Rising Euro Encourages Some Investors to Sell
Gold may decline in New York as a strengthening euro prompts sales by some investors who bought bullion as an alternative asset to the currency.
The dollar slid to a nine-week low against the euro after reports yesterday showed U.S. manufacturing contracted in June by the most in a year and producer prices fell. U.S. reports may today show household sentiment deteriorated and consumer prices fell. Gold priced in euros today slipped to an eight-week low.
“Investors’ trust in the euro currency is back,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Previous gold safe-haven buyers, mostly Europeans due to euro fears, are reconsidering their gold investments as gold prices in euro terms are declining.”
Gold futures for August delivery lost $3.70, or 0.3 percent, to $1,204.60 an ounce at 8:05 a.m. on the Comex in New York. Prices are down 0.4 percent this week. Gold for immediate delivery in London was 0.3 percent lower at $1,204.75.
Gold gained with the dollar in the previous three quarters as the euro slumped 16 percent in the period against the greenback. Bullion futures climbed to a record $1,266.50 an ounce on June 21 as investors sought to protect their wealth against the debt crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.
Lower ‘Fixing’
Bullion fell to $1,204.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,208 at yesterday’s afternoon fixing. The dollar slipped as much as 0.4 percent against the euro today. Gold typically moves inversely to the U.S. currency.
Sixteen of 24 traders, investors and analysts surveyed by Bloomberg, or 67 percent, said that bullion will climb next week. Three forecast lower prices and five were neutral.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, declined 0.61 metric ton to 1,314.21 tons yesterday, according to the company’s website. Global holdings of the metal by ETFs fell 0.7 ton from a record to 2,075.42 tons yesterday, according to Bloomberg data from 10 providers.
“We continue to expect gold to tread water, if not slip, during the summer weeks,” Royal Bank of Scotland Group Plc analysts including Nick Moore said in a report today. “The steady performance in the first weeks of July suggests that price dips are likely to stimulate buying interest. Should we see a more significant selloff we expect decent support at $1,150 an ounce.”
Silver for September delivery in New York fell 0.5 percent to $18.265 an ounce. Platinum for October delivery declined 0.5 percent to $1,526.30 an ounce. Palladium for September delivery dropped 1.3 percent to $461.25 an ounce.
Platinum demand should improve in the fourth quarter and the metal is “good value” below $1,500, RBS said in the report. Demand through platinum exchange-traded products was less than 3 tons in the second quarter, down from 8.5 tons in the first quarter, the bank said.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.
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