Gold Heads for Longest Slump in Five Weeks on ETP Decline

Gold futures fell, capping the longest slump in five weeks, as holdings in exchange-traded products backed by the metal extended a decline to the lowest since July 2011.

As of May 10, assets in ETPs dropped 0.6 percent to 2,228 metric tons, according to data compiled by Bloomberg. Last month, gold futures tumbled into a bear market, and a record $17.9 billion was erased from the value of the funds.

“Without an end to this persistent ETF liquidation, the upside for gold in our opinion is severely constrained,” Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said in a report. “Clearly, the futures market is not convinced that gold can sustain significant upside.”

Gold futures for June delivery dropped 0.2 percent to settle at $1,434.30 an ounce at 1:40 p.m. on the Comex in New York. The price declined for the third straight session, the longest slump since April 4. The metal has tumbled 14 percent this year.

Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data showed on May 10. The net-long position dropped 10 percent to 49,260 futures and options.

“Investors are losing interest in gold,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies.

Silver futures for July delivery rose 0.2 percent to $23.696 an ounce on the Comex. The price has dropped 22 percent this year.

On the New York Mercantile Exchange, palladium futures for June delivery advanced 1.8 percent to $718.70 an ounce.

Platinum futures for July delivery fell 0.1 percent to $1,484.50 an ounce. Trading was 46 percent lower than the average in the past 100 days, according to Bloomberg data.

To contact the reporters on this story: Debarati Roy in New York at Or droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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