Gold Prices Post Biggest Weekly Decline in Eight Months

Gold futures fell, capping the biggest weekly drop since September, after a U.S. equity rally and signs of easing tensions in Ukraine curbed demand for the precious metal as a haven. Silver dropped to an 11-month low.

U.S. durable-goods orders unexpectedly rose in April, indicating manufacturing is gaining, government data showed on May 27. Today, the Standard & Poor’s 500 Index of stocks climbed to a record. Last year, gold tumbled 28 percent on concern that the Federal Reserve would taper the pace of monetary stimulus as the economy rebounded.

Russia has pulled back most of its troops from the border with Ukraine, according to a U.S. defense official. Gold dropped below $1,250 an ounce to a 16-week low and posted the fifth straight daily decline, the longest slump since April 1.

“The safe-have premium is waning as people are gradually shrugging off worries about a slowdown in the U.S.,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “Money continues to flow into equities.”

Gold futures for August delivery fell 0.9 percent to settle at $1,246 an ounce at 1:39 p.m. on the Comex in New York. Earlier, the price touched $1,242.20, the lowest for a most-active contract since Feb. 3. This week, the metal dropped 3.6 percent, the most since Sept. 13.

On May 22, assets in global exchange-traded funds backed by gold fell to 1,715.8 metric tons, the lowest since Oct. 2, 2009, according to data compiled by Bloomberg.

This month, gold futures dropped 3.9 percent, the most since December. The metal has climbed 3.6 percent in 2014.

‘Transferring Capital’

“Risk appetite has been improving,” Sarah Xie, an analyst at Hong Kong-based Wing Fung Financial Group Ltd., said in a telephone interview. “Investors are transferring their capital from gold to the stock market. Turmoil in Ukraine has eased.”

Silver futures for July delivery fell 1.7 percent to $18.682 an ounce on the Comex. The price touched $18.615, the lowest since June 28. The metal declined for the fifth straight session, the longest slump since late March.

This week, silver slumped 3.8 percent, the most since March 21. The metal has declined 18 percent in the past 12 months.

On the New York Mercantile Exchange, palladium futures for September delivery rose 0.2 percent to $836.35 an ounce. This month, the price climbed 2.9 percent, the fourth straight gain and the longest rally since January 2011.

Platinum futures for July delivery fell 0.5 percent to $1,452.70 an ounce. In May, the metal rose 1.7 percent, the fifth gain in six months.

In May, ETPs backed by the metals rose to records, according to Bloomberg data. An 18-week strike by workers in South Africa at the three largest platinum companies has crippled output.

The nation is the world’s top platinum producer and the second-biggest source of palladium. Labor talks being brokered by the government will continue today.

Russia is the largest palladium supplier.

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 editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Patrick McKiernan

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.