Gold May Decline in New York Trading as Some Investors Sell After Rally

Gold may decline for a second day in New York as some investors sell the metal to take advantage of its rally this year.

Gold futures reached a record $1,432.50 an ounce on Dec. 7 on demand for a protection of wealth, outperforming global equities and U.S. Treasuries this year. The dollar fell against the euro before a meeting of European Union leaders to discuss how to contain the debt contagion in the region. Moody’s Investors Service yesterday said it may cut Spain’s credit rating.

“End-of-year book-squaring and profit-taking is to be expected and could see a slight sell-off prior to the Christmas holidays,” brokerage GoldCore Ltd. in Dublin said today in a report. “Any sell-off will likely be short-lived. Gold will likely continue to receive safe-haven demand.

Gold futures for February delivery lost $4.30, or 0.3 percent, to $1,381.90 an ounce at 7:52 a.m. on the Comex in New York. The metal for immediate delivery in London was little changed at $1,381.35.

Gold gained 26 percent this year, set for a 10th annual gain, as investors lost confidence in currencies and bought precious metals as a protection of wealth. European governments are struggling to stop contagion spreading from Greece and Ireland to the rest of the euro region. EU leaders start a two- day summit in Brussels today with the focus on a permanent crisis-fighting system.

The Federal Reserve this week maintained a plan to buy back $600 billion in bonds. China last week raised reserve- requirement ratios for banks and didn’t increase interest rates even after consumer prices climbed at the fastest pace in more than two years in November.

‘Trend Is Up’

‘‘The trend is up,’’ Wallace Ng, executive director at ABN Amro Bank NV in Hong Kong, said by phone today. ‘‘Safe haven, that’s one reason, and possible inflationary pressure. Macro- economic factors which favored gold still haven’t changed. Precious metals will test low sides, but that doesn’t mean that we are bearish.”

Gold assets in exchange-traded products rose 8.14 metric tons to 2,099.7 tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver holdings added 8.3 tons to 15,171.6 tons, the highest amount since at least February, data from four providers show.

Silver for March delivery in New York lost 0.6 percent to $29.075 an ounce. It rose to $30.75 on Dec. 7, the highest level since March 1980, and is up 73 percent this year. Prices reached an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market.

Palladium for March delivery added 0.2 percent to $754 an ounce. It climbed to $780 on Dec. 3, the highest price since April 2001. Platinum for January delivery was 0.2 percent lower at $1,700.20 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Sungwoo Park in Seoul at spark47@bloomberg.net.

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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