Gold Drops From One-Week High as Global Equities Advance

Gold futures fell from a one-week high as a rally in global equities curbed demand for the precious metal as an alternative investment.

The MSCI All-Country World Index of stocks extended a rally to a five-year high after China’s economic growth accelerated. Gold jumped 3.9 percent in the previous two days amid speculation that the Federal Reserve will hold off on scaling back monetary stimulus.

“People want to be in equities as the most lucrative investment,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “Also, there is some profit-taking after the big rally” in gold, he said.

Gold futures for December delivery fell 0.6 percent to settle at $1,314.60 an ounce at 1:38 p.m. on the Comex in New York. Earlier, the price reached $1,328.90, the highest for a most-active contract since Oct. 8.

Gold has slumped 22 percent this year, heading for the first annual decline since 2000. Some investors lost faith in the metal as a store of value as U.S. equities rallied to a record and inflation remained muted.

The stalemate over U.S. fiscal policy that shut the government for 16 days slowed economic growth, President Barack Obama said yesterday. Narayana Kocherlakota, the president of the Minneapolis Fed, said policy makers should maintain low interest rates to reduce unemployment, even at the risk of temporarily pushing inflation above the central bank’s 2 percent goal.

Silver futures for December delivery fell 0.2 percent to $21.913 an ounce. The price has tumbled 28 percent this year.

On the New York Mercantile Exchange, platinum futures for January delivery increased 0.2 percent to $1,437.80 an ounce. This week, prices advanced 4.5 percent, ending a seven-week slump. Palladium futures for December delivery climbed 0.4 percent to $740.65 an ounce. The metal gained 3.8 percent this week, the most since July.

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

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

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