Gold Rebounds on Investor Demand for Safe Haven as Global Equities Tumble
Gold rose, rebounding from the biggest drop in four weeks, as some investors purchased the metal as a haven from tumbling equity markets.
The Standard & Poor’s 500 Index fell for the fourth straight session on speculation that the economy will be slow to recover. Sales of previously owned U.S. homes slumped more than forecast in July and the number of unsold houses swelled, the National Association of Realtors said. Gold has gained 13 percent this year, touching a record $1,266.50 an ounce in June.
“We’re in the midst of another freak-out,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “Investors are pulling money out of equities in droves and looking to the perceived safety of gold.”
Gold futures for December delivery rose $4.90, or 0.4 percent, to settle at $1,233.40 an ounce at 1:38 p.m. on the Comex in New York. Earlier, the price fell as much as 1.4 percent, the biggest intraday drop since July 27.
Before today, the S&P 500 lost 4.3 percent this year and the Reuters/Jefferies CRB Index of 19 commodities declined 6.1 percent, while gold headed for a 10th straight annual gain. The CRB fell 1.5 percent as of 2 p.m., heading for the biggest one- day slide since June 29.
“There’s an overall crisis in confidence in the U.S. recovery, so investors are adjusting their positions in commodities,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “The flight-to-quality crowd is jumping on gold.”
Gold Funds Unchanged
Still, gold’s gains may be limited after rallying for three straight weeks. Some investors are selling the metal after prices topped $1,200, Zeman of LaSalle said.
Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,299.47 metric tons yesterday, data on the company’s website showed. Holdings are 1.6 percent below June’s record of 1,320.44 tons.
“Right now, you don’t have a lot of physical demand,” said Zeman. “The other thing that’s missing is big-fund buying. When that comes back, gold can go much higher.”
Silver for December delivery rose 38.6 cents, or 2.1 percent, to $18.428 an ounce on the Comex. Platinum for October delivery gained $9.10, or 0.6 percent, to $1,517.70 an ounce on the New York Mercantile Exchange, while palladium for September delivery increased 55 cents, or 0.1 percent, to $484.25 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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