Gold futures declined for a third straight day as gains in equities curb demand for the precious metal as an alternative investment.
The Dow Jones Industrial Average (INDU) rose as much as 0.6 percent, near a record reached last month, before the close of gold trading in New York. Gold slumped 28 percent last year amid a rally in equities and as inflation remained low.
“The strength in equities is working against gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “There is very little interest in gold.”
Gold futures for June delivery fell 0.1 percent to settle at $1,287.70 an ounce at 1:34 p.m. on the Comex in New York. Prices declined 1.6 percent in the previous two sessions. Trading was 13 percent below the average for the past 100 days for this time, data compiled by Bloomberg showed.
Bullion has gained 7.1 percent this year, partly as tension over Ukraine spurred demand for haven assets. Russian President Vladimir Putin said his country’s army is testing its combat readiness, ramping up tensions after he pledged a pullback from Ukraine’s border. Pro-Russian separatists in Ukraine vowed to press ahead with autonomy votes.
“Safe-haven buying has dominated jittery gold trading since early April amid a lack of other drivers,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. Prices declines are “likely, should matters de-escalate from here,” he said.
Gold rose 70 percent from December 2008 to June 2011 as the Federal Reserve bought debt and cut interest rates to a record in a bid to boost the economy. Fed officials trimmed stimulus last week for the fourth consecutive meeting and are on track to halt buying in the second half of 2014.
“Sufficient underlying strength” made the reductions “appropriate,” Fed Chair Janet Yellen said yesterday at a hearing of the congressional Joint Economic Committee.
Silver futures for July delivery fell 1.1 percent $19.138 an ounce in New York.
On the New York Mercantile Exchange, palladium futures for June delivery rose 0.9 percent to $804.05 an ounce. Prices on May 6 reached $822, the highest since August 2011, and are up 12 percent this year on concern supply will be disrupted by a miners’ strike in South Africa and sanctions by western nations against Russia. The two countries are the biggest producers. Holdings of the metal in exchange-traded products rose 2.4 percent to a record 84 metric tons yesterday, data compiled by Bloomberg show.
Platinum futures for July delivery gained 0.2 percent to $1,438.10 an ounce.
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