Gold Futures Tumble Most in Six Months as Equities Rally; Silver Slides
Gold Poised for 10th Annual Increase on Inflation
Kerem Uzel/Bloomberg
Gold bangles are seen for sale in a jewelry shop.
Gold bangles are seen for sale in a jewelry shop. Photographer: Kerem Uzel/Bloomberg
Dec. 20 (Bloomberg) -- Investors and analysts talk about their outlook for gold for 2011 and beyond. This report compiles comment from Bank of America-Merrill Lynch's Head of Commodity Research Francisco Blanch, Greenlight Capital Inc.'s President David Einhorn, ECU Group Plc's Head of Investment Philip Manduca, Aberdeen Asset Management Plc's Head of Strategy Mike Turner, Standard Bank Plc's Head of Commodity Research Walter de Wet and Standard Chartered Plc's Metals Analyst Dan Smith. (Source: Bloomberg)
Dec. 28 (Bloomberg) -- George Gero, senior vice president at RBC Capital Markets, talks about the outlook for commodity prices and the gold market. He speaks with Pimm Fox on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
Jan. 3 (Bloomberg) -- Mike Englund, chief economist at Action Economics LLC, talks about the outlook for crude oil prices and the U.S. dollar in 2011. Englund also discusses the U.S. economy, housing market and Treasuries. He speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Dec. 22 (Bloomberg) -- Gijsbert Groenewegen, founder of Silver Arrow Capital Management, talks about the outlook for commodities including copper and gold. Groenewegen, speaking with Matt Miller and Emily Chang on Bloomberg Television's "Street Smart," says a cornering of the copper market could be a "huge problem." (Source: Bloomberg)
Gold tumbled the most in six months on speculation that an economic recovery will curb demand for the metal as a haven. Silver slumped more than 5 percent.
Orders placed with U.S. factories unexpectedly rose in November, a report showed today. Yesterday, figures showed manufacturing in the U.S. expanded at the fastest pace in seven months in December. In 2010, gold posted the 10th straight annual gain, outperforming stocks and bonds, amid escalating U.S. and European debt.
“Gold is rolling over,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “Some of the flight-to-quality bid is coming out of gold. The money that was expected to come into the market isn’t there.”
Gold futures for February delivery fell $44.10, or 3.1 percent, to settle at $1,378.80 an ounce at 1:55 p.m. on the Comex in New York, the biggest decline for a most-active contract since July 1. Yesterday, the metal rose to the highest settlement ever. On Dec. 7, the commodity reached an intraday record of $1,432.50.
Gold assets in exchange-traded products added 1.48 metric tons to 2,098.72 tons yesterday, the first increase since holdings reached a record 2,114.6 tons two weeks ago, according to data compiled by Bloomberg from 10 providers. Holdings in ETPs backed by bullion rose 17 percent in 2010.
“Some of the pessimism about the economy that drove investors into gold is gone,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “There was no reason to chase gold at all-time highs.”
Appeal of Equities
Equities “may provide more appeal than gold at the current juncture, as support comes from improving economic data,” Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said in a report.
The MSCI World Index of equities rose 23 percent in the second half of 2010, while gold climbed 14 percent.
Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, urged clients to swap their gold priced in euros for the metal priced in yen.
For most of last year, Gartman advocated selling euros to buy gold to hedge against the relative strength of the dollar.
The greenback rose as much as 0.7 percent against the yen. It also strengthened against the Australian and Canadian dollars.
Silver futures for March delivery fell $1.617, or 5.2 percent, to $29.508 an ounce, the biggest drop since Nov. 12. Yesterday, the price reached a 30-year high of $31.275. The metal gained 84 percent last year.
‘Violent Movement’
“Silver is going to get hit hard,” Klopfenstein of Lind- Waldock said. “Silver is the one that corrects the most among the metals. Investors should prepare for more volatile and violent movement.”
Palladium futures for March delivery declined $31.35, or 3.9 percent, to $769.05 an ounce on the New York Mercantile Exchange. Yesterday, the metal reached $808.90, the highest since March 2001. The price surged 96 percent last year.
Platinum futures for April delivery fell $39, or 2.2 percent, to $1,747.40 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.
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