Gold Heads for Worst Quarterly Run Since 2001 on U.S. Economy

Gold declined for a fourth day, extending the first back-to-back quarterly losses since 2001, as signs that the U.S. economy is recovering cut demand for the metal as a store of wealth. Silver tumbled.

Gold for immediate delivery fell as much as 0.5 percent to $1,592.74 an ounce and was at $1,594.86 at 3:24 p.m. in Singapore. Prices have lost 4.8 percent this quarter as holdings in exchange-traded products contracted 6.8 percent, the most on record. Bullion for June delivery lost 0.2 percent to $1,594.60 an ounce on the Comex in New York.

Orders for U.S. durable goods climbed more than forecast in February and home prices increased the most since June 2006, reports showed yesterday, signaling that the recovery in the world’s biggest economy is gaining traction. Federal Reserve Chairman Ben S. Bernanke said on March 20 that the U.S. central bank may adjust its monthly bond buying based on several measures, including payrolls, wages and jobless claims.

“As we see the U.S. recovery gaining momentum, that’s making funds flow back to the dollar and pushing it up,” said David Lennox, an analyst at Fat Prophets in Sydney. “That’s putting pricing pressure on gold.”

The Dollar Index, a gauge against six major trading partners, rose for a third day and is poised for a quarterly advance. Gold holdings in ETPs stood at 2,453.47 metric tons yesterday, according to data compiled by Bloomberg.

Dallas Fed President Richard Fisher said yesterday that he’d like the U.S. to reduce its mortgage-backed security purchases program amid signs that the economy will probably grow at about 3 percent by the end of the year. At present, the Fed buys $85 billion of securities a month to spur the recovery.

Silver for immediate delivery slumped as much as 1.8 percent to $28.245 an ounce, the lowest since March 1, and was at $28.315. Prices are set to drop for a second quarter. Spot platinum traded little changed at $1,573.25 an ounce, while palladium lost 0.5 percent to $759.50 an ounce.

To contact the reporter for this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net

To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net

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