Gold futures fell for the second straight day on optimism that policy makers in Europe are moving closer to resolving the region’s debt woes, cutting demand for the precious metal as a haven.
The euro gained against the dollar as European Union officials prepared to meet tomorrow to seek a solution to the region’s fiscal crisis. Gold pared gains as John Taylor, the founder of FX Concepts LLC in New York, the world’s largest currency hedge fund, said the price will surge to $1,900 an ounce by October.
“A lot of the flight-to-quality money is coming out of gold,” Adam Klopfenstein, a market strategist at Lind-Waldock, a broker in Chicago, said by telephone. “There haven’t been any flare-ups in the euro zone.”
Gold futures for August delivery fell $4.20, or 0.3 percent, to settle at $1,596.90 at 1:43 p.m. on the Comex in New York. Earlier, the price dropped as much as 1.2 percent. Yesterday, the metal rose to a record $1,610.70 before closing 0.1 percent lower. This week, the commodity priced in euros and pounds climbed to all-time highs.
“Improvement in risk sentiment is also partly responsible for gold’s loss of momentum,” Edel Tully, a London-based analyst at UBS AG, said in a report. “Market expectations appear to be leaning toward a more-positive outcome” from the EU summit tomorrow, she said.
Gold’s losses were limited on concern that President Barack Obama and congressional leaders won’t reach an accord on increasing the nation’s debt limit. The metal has jumped 34 percent in the past 12 months.
“The overall risk factors are still there, so there are a lot of people willing to come in and buy gold when there’s a dip in prices,” Klopfenstein of Lind-Waldock said.
Silver futures for September delivery fell 66.3 cents, or 1.6 percent, to $39.558 an ounce. The metal has more than doubled in the past year.
Palladium futures for September delivery dropped $4.65, or 0.6 percent, to $793.65 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery declined 20 cents to $1,776.10 an ounce.
To contact the editor responsible for this story: Steve Stroth at firstname.lastname@example.org