Gold Drops for Third Straight Day as Equities Rebound Trims Haven Demand
Gold Drops for Third Day
Jerome Favre/Bloomberg
Gold, which reached a record $1,814.95 on Aug. 11, is still 22 percent higher this year on debt woes in Europe and the U.S..
Gold, which reached a record $1,814.95 on Aug. 11, is still 22 percent higher this year on debt woes in Europe and the U.S.. Photographer: Jerome Favre/Bloomberg
Aug. 12 (Bloomberg) -- David Stroud, chief executive officer of TS Capital Partners, talks about the commodities markets and the outlook for silver and gold prices. He speaks with Julie Hyman on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
Aug. 11 (Bloomberg) -- Mitchell Krebs, chief executive officer of Coeur d'Alene Mines Corp., talks about the outlook for gold prices and his company's growth strategy. He speaks with Lisa Murphy on Bloomberg Television's "InBusiness with Margaret Brennan." (Source: Bloomberg)
Gold declined for a third day, set for the worst run in seven weeks, as concern eased that the global economy is stalling, boosting global equities and cutting demand for haven investments.
Spot bullion lost 0.5 percent to $1,738.88 an ounce at 2:43 p.m. in Singapore, after shedding as much as 1.1 percent. Gold, which reached a record $1,814.95 on Aug. 11, is still 22 percent higher this year on debt woes in Europe and the U.S. The metal in Swiss francs rose to this year’s high of 1,390.91 today.
The MSCI Asia Pacific Index rose for the first day in three after Japan’s economy contracted less than estimated in the second quarter, adding to signs of a rebound from a record earthquake and tsunami in March. U.S. retail sales climbed the most in four months in July, while applications for jobless benefits were the lowest since April, reports showed last week.
“The market’s taking a step back and I’m still thinking it’s just a little bit too high,” Jonathan Barratt, a managing director at Commodity Broking Services Pty., said in a Bloomberg Television interview. “If the equity markets start to pick up, then I think people will switch out of their gold positions.”
December-delivery gold dropped 0.2 percent to $1,739.10 an ounce, after losing as much as 0.7 percent on the Comex in New York as higher margins on contracts encouraged sales. CME Group Inc. (CME), the largest futures market, hiked initial- and maintenance margins, or the minimum amount of cash that investors must keep on deposit, by 22 percent from the close of trade on Aug. 11.
Hedge Funds
Exchange-traded product holdings decreased for a second day on Aug. 12 to 2,182.083 metric tons, after reaching a record 2,216.756 tons on Aug. 8, Bloomberg data show. Hedge funds and other money managers trimmed their net-long gold positions by 18 percent to 203,573 contracts in the week to Aug. 9, data from the U.S. Commodity Futures Trading Commission showed.
In Europe, the Stoxx Europe 600 Index trimmed its third weekly drop last week after France, Spain, Italy and Belgium imposed bans on short selling to stabilize markets amid speculation the region’s debt crisis may spread to France.
The “uncertainty in financial markets, whether from the growth outlook or the ongoing sovereign-debt crisis, is expected to remain a benefit to perceived safe-haven commodity assets, of which we believe gold is the standout,” Morgan Stanley analysts led by Hussein Allidina said in a report today.
Spot silver declined as much as 1.1 percent to $38.6875 an ounce, while palladium advanced as much as 1.7 percent to $759.50 an ounce. Cash platinum shed 0.4 percent to $1,789 an ounce, after earlier climbing 0.4 percent.
To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net
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