Gold Drops for Fifth Straight Day on Euro Weakness as Fed Tapers

Gold declined for a fifth day as the euro weakened against the dollar, and on speculation that the Federal Reserve will press on with reducing monetary stimulus.

Bullion for immediate delivery fell as much as 0.7 percent to $1,280.02 an ounce, the lowest level since May 2, and traded at $1,285.38 at 9 a.m. in Singapore, according to Bloomberg generic pricing. The metal last week completed the first back-to-back weekly drop since March as the euro capped the biggest weekly loss in seven against the greenback.

Gold ended a 12-year bull run in 2013 on expectations that the Fed would pare back the bond-buying program put in place to aid recovery from the financial crisis. The euro was near the lowest in a month against the dollar before speeches today by European Central Bank officials, after President Mario Draghi signaled last week the central bank will ease policy in June.

“Euro weakness has weighed on gold,” said Zhu Siquan, an analyst at GF Futures Co., a unit of the Guangzhou, China-based company that bought Natixis Commodity Markets Ltd. “Haven buying has receded as people are unwilling to chase rallies given the uncertainty surrounding developments in Ukraine.”

Gold has risen 7 percent this year, driven by haven demand as tension rose between Ukraine and Russia. Pro-Russian groups hailed a majority in favor of secession in a referendum they organized in eastern Ukraine that was dismissed as illegitimate by the government in Kiev and its U.S. and European allies.

Gold Positions

Gold for June delivery fell 0.2 percent to $1,285.10 an ounce on the Comex in New York. Money managers raised their net-long gold position 14 percent to 102,895 futures and options in the week to May 6, the most since February, U.S. Commodity Futures Trading Commission data show.

Assets in the SPDR Gold Trust, the largest bullion-backed exchange-traded product, were unchanged for a fifth day on May 9 at 782.85 metric tons, the lowest since January 2009. In China, the largest consumer, volumes for the benchmark spot gold contract in Shanghai climbed to a two-week high on May 9.

Silver for immediate delivery was at $19.182 an ounce from $19.1696 on May 9, after dropping as much as 0.6 percent to $19.0503 earlier. Platinum lost 0.4 percent to $1,423.50 an ounce, and palladium retreated 0.2 percent to $800.50 an ounce.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net Jake Lloyd-Smith, Ovais Subhani

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