Gold traded close to the lowest price in more than a week as a stronger dollar curbed demand for bullion as an alternative investment.
Bullion declined as European stocks fell and the euro weakened as much as 0.4 percent against the greenback to the lowest level in more than a week. The International Monetary Fund said European banks may need to sell as much as $4.5 trillion in assets through 2013 if policy makers fall short of pledges to stem the fiscal crisis. Spain’s Prime Minister Mariano Rajoy is struggling to contain the country’s deficit as he meets with French President Francois Hollande in Paris today.
“The stronger dollar has helped gold to move lower,” said Saeed Amen, an analyst at Nomura International Plc in London. “There are still increasing flows into gold ETFs, so I think it’s likely a temporary dip.”
Gold for December delivery was little changed at $1,764.50 an ounce by 6:42 a.m. on the Comex in New York after falling as much as 0.2 percent. The metal dropped to $1,762 yesterday, the lowest level since Sept. 27. Gold for immediate delivery was 0.1 percent lower at $1,762.82 an ounce in London.
Holdings in exchange-traded products rose to a record 2,582.43 tons yesterday, according to data compiled by Bloomberg. Bullion rose to a near 11-month high of $1,798.10 an ounce on Oct. 5.
Growth in China, vying with India as the top bullion user, is decelerating. Alcoa Inc. (AA) said a slowdown in China will cut global demand for aluminum a day after the International Monetary Fund and Rio Tinto Group trimmed their growth outlook estimates for China.
“The fact that a company like Alcoa is cutting forecasts, due in the main to the Chinese slowdown, is important,” David Govett, global head of precious metals at Marex Spectron Group Ltd. said in a report today. “Any slowdown there is a major factor in the gold price.”
Physical demand shows no signs of a “major pick-up,” Govett wrote. Coupled with economic stagnation in Europe and, to a lesser degree, in the U.S., this will prevent any sharp short- term gains in prices, he wrote.
Gold at the morning “fixing,” used by some mining companies to sell output, dropped to $1,763 an ounce in London from $1,774 yesterday afternoon.
Silver for December delivery lost 0.5 percent to $33.82 an ounce. Platinum for January delivery fell 1.4 percent to $1,672.20 an ounce and palladium for December delivery dropped 1.1 percent to $650.90 an ounce.
To contact the reporter on this story: Maria Kolesnikova in London at firstname.lastname@example.org
To contact the editor responsible for this story: Claudia Carpenter at email@example.com