Gold Heads for Longest Slump Since August on Equity Rally

Gold futures fell, capping the longest slump since August, as a rally in global equities curbed demand for alternate investments.

The MSCI All-Country World Index of stocks rose to the highest since November 2007 as China’s manufacturing expanded at the fastest pace in five months. The Standard & Poor’s 500 Index extended a rally to a record. Increases in equities and the dollar curbed demand for gold, Barclays Plc said in a report.

The metal touched a 17-week low today, partly as tensions eased in Eastern Europe. A majority of Russia’s forces have withdrawn from the border with Ukraine, a U.S. Pentagon spokesman said on May 30. Hedge funds pared bets on a gold rally at the fastest pace this year.

“People don’t see many reasons to be in gold when things are looking up,” Tom Power, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “The safe-haven premium has diminished.”

Gold futures for August delivery fell 0.2 percent to settle at $1,244 an ounce at 1:43 p.m. on the Comex in New York. Earlier, the price touched $1,241.10, the lowest for a most-active contract since Feb. 3. The metal fell for a sixth straight session, the longest slump since Aug. 6.

Trading was 39 percent below the average for the past 100 days for this time, according to data compiled by Bloomberg.

CFTC Data

Money managers cut their net-long position, or bets on higher gold, by 24 percent in the week ended May 27, U.S. Commodity Futures Trading Commission data showed on May 30. Short holdings surged 72 percent, the most in six months, the data show.

“The risk status of gold has lessened somewhat,” Jonathan Barratt, the chief investment officer at Ayers Alliance, a wealth-management company in Sydney, said in a telephone interview. “There’s really no major issues out there, you can deploy your funds elsewhere and that’s what people are doing.”

Silver futures for July delivery rose 0.3 percent to $18.739 an ounce on the Comex. On May 30, the price touched $18.615, the lowest since June 28.

On the New York Mercantile Exchange, platinum futures for July delivery fell 1.1 percent to $1,436.70 an ounce.

Palladium futures for September delivery declined 0.4 percent to $832.65 an ounce.

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 Joe Richter

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