Gold Falls on U.S. Stimulus Speculation; Palladium Jumps

May 28 (Bloomberg) -- Bloomberg's Alix Steel examines hedge funds leaving their gold positions and gold miners facing stock declines as volatility spikes in the gold market on continued Federal Reserve action. She speaks on Bloomberg Television's "In The Loop."

Gold fell, erasing gains after topping $1,400 an ounce, on signs that the Federal Reserve may curb U.S. monetary stimulus, eroding demand for the metal as a store of value. Palladium rose the most in six months.

Confidence among U.S. consumers climbed in May to the highest in more than five years, according to a New York-based private research group. In the 12 months through March, home prices rose by the most in seven years, a separate report showed. Holdings in global exchange-traded products backed by gold headed for the fifth straight monthly drop.

“Good U.S. data continues to weigh on gold,” Thomas Capalbo, a broker at Newedge Group in New York, said in a telephone interview. “Also, the withdrawals from ETFs show that the momentum buyers remain bearish.”

Gold futures for August delivery slipped 0.6 percent to settle at $1,379.70 an ounce at 1:41 p.m. on the Comex in New York. Earlier, the price rose as much as 1 percent to $1,401.90. This month, the metal’s 60-day historical volatility reached the highest since December 2011.

Trading was more than double the average in the past 100 days for this time, according to data compiled by Bloomberg. The Comex floor was shut yesterday for a national holiday, and yesterday’s electronic transactions will be booked with today’s trades for settlement purposes.

Debt Purchases

Fed Chairman Ben S. Bernanke said May 22 that the central bank may slow its $85 billion of monthly debt purchases if the economy shows sustained signs of improvement.

Silver futures for July delivery dropped 1.3 percent to $22.193 an ounce on the Comex.

On the New York Mercantile Exchange, palladium futures for September delivery jumped 4.3 percent to $759.55 an ounce, the biggest gain since Nov. 13. Trading was almost four times the average in the past 100 days for this time, according to Bloomberg data. The metal has climbed 8 percent this year.

Russia exported 202 kilograms (6,494 ounces) last month to Switzerland, compared with 9,093 kilograms in March, data from the Swiss Federal Customs Administration showed today.

This will be the last year of “substantial shipments” from Russia’s government stockpiles, according to Johnson Matthey Plc, which estimates 2013 supply from the inventory at 100,000 ounces.

Platinum futures for July delivery advanced 0.7 percent to $1,461.80 an ounce.

Holdings in platinum-backed ETPs, up 34 percent this year, reached a record 62.5 tons on May 24, according to Bloomberg data. Assets in palladium products gained 16 percent this year to 66.9 tons. The metals are used in jewelry and pollution-control devices in vehicles.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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

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