Gold Swings as Investors Weigh Slowing Physical Demand, Crisis

Gold swung between gains and losses in London as investors weighed slowing physical demand against concern that Europe’s debt crisis may worsen. Silver was little changed after nearing a bear market yesterday.

Government officials in Cyprus will seek easier bailout terms in talks with representatives of the European Union and International Monetary Fund today, before a meeting of euro-area finance officials later this week. The U.S. Mint sold 62,000 ounces of American Eagle gold coins last month, compared with 80,500 for all of February and 150,000 in January, its website shows. Holdings in gold-backed exchange-traded products are down about 6.9 percent this year, data compiled by Bloomberg show.

“There’s not much physical interest anywhere,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone. “There’s still a lot of uncertainty and that will continue to linger.”

Gold for immediate delivery was little changed at $1,599.91 an ounce by 9:53 a.m. in London. Prices gained as much as 0.3 percent and fell as much as 0.1 percent. Futures for June delivery were 0.1 percent lower at $1,600.10 on the Comex in New York. Futures trading volume was 48 percent below the average in the past 100 days for this time of day, according to data compiled by Bloomberg.

While gold’s 1.2 percent advance in March was the first monthly gain since September, it posted the first back-to-back quarterly losses since the start of 2001. Prices are down 4.6 percent this year, after 12 straight annual increases, on mounting optimism the U.S. economy is strengthening.

Cyprus’s government is seeking more time to reach targets required in return for 10 billion euros ($12.8 billion) in international funds after agreeing to impose losses on uninsured depositors at the country’s two biggest banks, Bank of Cyprus Pcl and Cyprus Popular Bank Pcl.

Silver for immediate delivery lost less than 0.1 percent to $28.03 an ounce in London, after reaching $27.89 yesterday, the lowest since Aug. 16. A close at $28.007 would be a 20 percent drop from Oct. 4, the common definition of a bear market. Palladium slid 0.8 percent to $775.15 an ounce. Platinum was 0.2 percent lower at $1,592 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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