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Gold, Little Changed, May Decline on Damped Demand for Industrial Usage
Gold prices, little changed, may drop for a fifth session as concerns that the global economic recovery may be slowing damped demand for the metal used in industrial goods as well as jewelry.
Ireland’s credit rating was downgraded yesterday by Moody’s Investors Service, which cited a “significant loss of financial strength” and the cost of bank bailouts. The precious metal has dropped 6.5 percent from a record $1,265.30 an ounce on June 21. The euro has fallen 9.5 percent versus the dollar this year on concern that widening budget deficit in countries including Ireland, Spain and Greece could lead to a default.
“IBM results were not good, the euro is weak and Ireland’s rating was downgraded,” said Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul. “Almost half of all gold is for industrial use and recent industry-related data point to a possible slowdown in the economic recovery.”
Gold for immediate delivery was little changed at $1,183.6 an ounce at 2:01 p.m. Seoul time. The price touched $1,177.47 yesterday, the lowest level for a most-active contract since May 24. Futures for August delivery were little changed at $1,183.20 on the Comex in New York.
International Business Machines Corp., the world’s biggest computer-services company, reported yesterday revenue last quarter that missed analysts’ estimates and a drop in services- contract signings.
‘Safe Asset’
“The merit of gold as a safe asset seems to be waning a bit recently. We still have to wait and see,” said C.H. Oh, head of overseas futures at NH Investment & Futures in Seoul.
Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,314.21 metric tons as of July 19, according to figures on its website.
U.S. housing starts fell 2.7 percent to a 577,000 annual rate in June, according to the median estimate of economists in a Bloomberg News survey before Commerce Department data today.
Hedge-fund managers and other large speculators trimmed their net-long positions, or bets on a rally in Comex gold futures, by 2 percent to 204,921 contracts in the week ended July 13, according to government data. That marked the lowest level since April 6.
Immediate-delivery silver gained 0.5 percent to $17.6800 an ounce. Platinum was 0.1 percent lower at $1,511.25 an ounce, while palladium climbed 0.6 percent to $447.25 an ounce.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.
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