Gold Futures Decline in New York on Investor Sales After Rally to Record
Gold futures fell for the second straight day on investor sales after the metal surged to a record. Silver dropped the most in two weeks.
The 14-day relative-strength index for gold rose above 70 in the previous three days, a signal that prices are poised to fall. The metal reached a record $1,631.20 an ounce yesterday as the cost of insuring U.S. debt rose to a 17-month high. Before today, the commodity gained 7.6 percent this month as debt woes in the U.S. and Europe escalated.
“Gold has moved $150 this month, so there are going to be some investors who are going to take profit,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview.
Gold futures for December delivery fell $1.10, or 0.1 percent, to settle at $1,616.20 at 1:44 p.m. on the Comex in New York. The price has gained 14 percent this year, heading for the 11th straight annual increase.
The U.S. House of Representatives is expected to vote to approve a debt-limit plan that the Senate has signaled it will reject. Treasury Secretary Timothy F. Geithner has said the government’s authority to borrow will run out on Aug. 2 unless Congress raises the debt ceiling.
“Gold’s job now is to hang in there until we get an idea of what the big money wants to do on the debt resolution,” Lesh of FuturePath said. “I can’t make an argument for being short gold from here.”
Gold may drop $30 to $60 if a debt agreement is reached, TD Securities said in a report.
“In the absence of a comprehensive deal, we do not see a sharp and prolonged sell-off,” the analysts said.
Silver futures for September delivery fell 77.4 cents, or 1.9 percent, to $39.794 an ounce on the Comex, the biggest drop since July 11.
Platinum futures for October delivery declined $15.60, or 0.9 percent, to $1,792.40 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery fell $5.10, or 0.6 percent, to $828.10 an ounce.
To contact the reporter on this story: 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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