Gold futures fell to a 15-week low in New York as U.S. equities climbed to a record, curbing demand for the precious metal as an alternative investment.
The Standard & Poor’s 500 Index (SPX) of stocks rose to a new intraday high as an unexpected increase in durable-goods orders boosted growth prospects for the U.S., the world’s largest economy. Last year, gold slumped 28 percent as equities surged and concern mounted that the Federal Reserve would slow the pace of the monetary stimulus.
Gold has declined 9.1 percent from a six-month high in March as the U.S. economy showed signs of improvement. Prices also fell as Ukraine’s President-elect Petro Poroshenko vowed to step up operations to rein in separatists in the east of the country as fighting continued after the weekend election.
“The surge in the equity market continues to push gold lower,” George Gero, a vice president and precious-metal strategist in New York at RBC Capital Markets, said in a telephone interview. “The fear premium because of Ukraine has lessened.”
Gold futures for August delivery fell 2 percent to settle at $1,265.70 an ounce at 1:34 p.m. on the Comex in New York after touching $1,264.50, the lowest for a most-active contract since Feb. 7.
Trading was more than double the 100-day average for this time, according to data compiled by Bloomberg. U.S. markets were closed yesterday for the Memorial Day holiday, and transactions will be booked today for settlement purposes.
Investors cut their bullish positions on gold for a second straight week, to 90,358 contracts as of May 20. The metal’s 30-day volatility dropped last week to the lowest in more than a year, and holdings in global exchange-traded products backed by bullion are the smallest since 2009. In 2013, more than $73 billion was erased from global ETPs.
Through May 23, futures traded in a range of about $44 this month. The narrow trading spread coupled with the declines in price swings signaled that gold was poised to break out of its range, James Cordier, the founder of Optionsellers.com in Tampa, Florida, said last week. Cordier said he sees futures falling to $1,150 by the end of the year.
The Fed pared its monthly asset buying to $45 billion in April, its fourth straight $10 billion cut. Gold climbed 70 percent from December 2008 to June 2011 as the central bank bought debt and held borrowing costs near zero percent.
On the New York Mercantile Exchange, palladium futures for September delivery fell 0.1 percent to $831.55 an ounce.
Platinum futures for July delivery declined 0.7 percent to $1,462.30 an ounce.
Silver futures for July delivery retreated 1.8 percent to $19.067 an ounce in New York, the biggest drop for a most-active contract since April 30.
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