Gold Falls From Two-Month High in N.Y. as Equity Rally Curbs Haven Demand
Gold prices fell from a two-month high as U.S. equities rebounded, eroding demand for the precious metal as a store of value.
The Standard & Poor’s 500 Index rose as much as 2.9 percent today after slumping 4.7 percent last month. Gold gained 5.6 percent in August, approaching the record $1,266.50 an ounce.
“Gold is not cheap, so you’re getting a little selling,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. “With interest rates so low, people are going anywhere they possibly can. Quantitative easing is good for everything.”
Gold futures for December delivery fell $2, or 0.2 percent, to $1,248.30 at 12:20 p.m. on the Comex in New York. Earlier, the price reached $1,256.60, the highest level since June 28.
The Federal Reserve has kept the benchmark interest rate from zero percent to 0.25 percent since December 2008 to revive the economy.
Fed officials agreed at last month’s meeting to put a $2.05 trillion floor on securities holdings and buy Treasuries to replace an estimated $395 billion of mortgage assets that would be repaid from August through the end of 2011, according to minutes released yesterday.
Treasuries also fell as a report showed U.S. manufacturing unexpectedly rose in August, reducing demand for a haven.
Gold’s losses will be limited, some analysts said. Holdings in 10 exchange-traded products tracked by Bloomberg rose to a record yesterday. In the second quarter, investors purchased 291.3 metric tons in ETFs, boosting metal demand by 36 percent, according to the producer-funded World Gold Council.
‘Uncertainty’
“Gold is deemed very necessary in today’s environment,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Uncertainty continues to support gold.”
Silver futures for December delivery fell 4.2 cents, or 0.2 percent, to $19.39 an ounce.
Platinum and palladium, which have wider industrial applications than gold, rallied on expectations that demand will rise as China’s economy grows.
A government report today showed manufacturing in China grew at a faster pace in August than forecast by economists in a Bloomberg survey.
Platinum futures for October delivery gained $11, or 0.7 percent, to $1,534.50 an ounce on the New York Mercantile Exchange.
Palladium futures for December delivery advanced $19.30, or 3.8 percent, to $521.15 an ounce.
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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