Gold Futures Fall in New York as Stock-Market Rally Eases Demand for Haven
Gold futures fell from the highest price in eight weeks as a rally in global equities eased demand for the precious metal as a haven.
The MSCI World Index of equities rose as much as 1.2 percent after a report showed applications for unemployment benefits in the U.S. fell more than forecast last week. Gold futures have gained 13 percent this year.
“Gold is working off perceived fear,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Gold will come off when the economic data is better than expected.”
Gold futures for December delivery fell $3.60, or 0.3 percent, to settle at $1,237.70 an ounce at 1:33 p.m. on the Comex in New York. Earlier, the most-active contract reached $1,246, the highest price since June 30. Gold’s all-time high was $1,266.50 on June 21.
The Standard & Poor’s 500 Index rose as much as 0.6 percent following the jobless benefits report before erasing gains. This year, the gauge tumbled 5.4 percent through yesterday as investors sold equities on concern that the economic recovery is slowing.
“When you see the economy recovering and equities rallying, the flight-to-quality crowd will start to put the brakes on gold,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago.
Durable-Goods Orders
Orders for durable goods in the U.S. increased less than forecast in July while sales of new homes unexpectedly dropped, reports showed yesterday.
“As long as U.S. economic releases continue to come in below expectations there is little risk of falling gold prices,” said Filip Petersson, an analyst at Stockholm-based bank SEB AB.
Gold may outperform other haven assets such as bonds, said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. The yield on the 10-year U.S. Treasury note yesterday touched the lowest level since January 2009.
“If yields continue to fall, owning gold is cheap right now,” Zeman said.
Silver futures for December delivery fell 5 cents, or 0.3 percent, to $19.022 an ounce on the Comex.
Platinum futures for October delivery gained $12.50, or 0.8 percent, to $1,539.90 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery advanced $10.80, or 2.2 percent, to $504.30 an ounce, also on the Nymex.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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