Gold Set for Worst Quarterly Loss in 8 Years on European Crisis

Gold is set for the worst quarter in eight years as concern that Europe’s debt crisis will persist boosted the dollar. Silver and platinum headed for their worst quarters since the collapse of Lehman Brothers Holdings Inc.

Spot gold rose as much as 0.3 percent to $1,556.55 an ounce and was at $1,556.10 at 10:34 a.m. in Singapore. Bullion fell 6.7 percent since the end of March, the worst quarter since the period to June 2004, as the dollar rallied 4.7 percent against a six-currency basket. The metal is also set for its weakest half- year showing since the six months to December 2008, after the U.S. Federal Reserve didn’t buy more debt and instead extended a program of replacing short-term bonds with longer-term debt.

European leaders meeting in Brussels struggled to find consensus, with Italy, Spain and France withholding agreement on a 120 billion-euro ($149 billion) growth pact, according to French President Francois Hollande. German Chancellor Angela Merkel, opposed to any effort to join forces on sovereign debt, yesterday canceled a planned media briefing as talks continue.

“Gold has been and, at least in the near term, will continue to be influenced by the global macroeconomic environment, movements in the dollar and other asset classes,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “Investors are waiting for what’s going to happen in Europe even though everyone knows they can’t resolve the crisis overnight.”

August-delivery gold gained 0.3 percent to $1,555.10 an ounce on the Comex in New York. Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, stood at 1,281.6 metric tons yesterday, unchanged since June 18, the company’s website showed.

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Cash gold has rallied for 11 years as central banks joined investors in buying bullion to diversify assets and hedge against accelerating consumer prices. The metal is 0.5 percent lower this year as the euro slumped 3.9 percent against the dollar. Standard & Poor’s GSCI Index of commodities dropped the most in a week yesterday as German unemployment climbed in June and U.S. jobless claims held near the highest level of 2012.

Spot silver rose 0.3 percent to $26.4412 an ounce. The metal slumped to $26.16 an ounce yesterday, the lowest price since Dec. 29, and is 18 percent lower since the end of March, poised for its worst quarterly loss since the three months to September 2008.

The drop in silver, used mainly in industrial applications, helped drive the so-called gold-silver ratio to 59.206 yesterday, the highest level since Sept. 26, data compiled by Bloomberg showed. One ounce of gold last bought 58.8459 ounces of silver.

Cash platinum was little changed at $1,389.25 an ounce, after falling to $1,384.25 earlier, the cheapest since Dec. 30. The metal used mainly in autocatalysts has declined 15 percent this quarter, the worst since the period to September 2008. Palladium, poised for a second quarterly loss, climbed 0.3 percent to $567.25 an ounce, after tumbling to $560.88 yesterday, the lowest level since Oct. 5.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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