Gold Falls as Portuguese Bank Seeks to Calm Debt Concerns

Gold declined for the first time in three days as concerns eased that banking woes in Portugal will spur a wider debt crisis in Europe, crimping demand for the precious metal as an alternative investment.

Banco Espirito Santo SA sought to calm investors after a parent company missed payment on short-term notes. Foreign lenders’ exposure to Portugal is low and the European Central Bank is ready to support banks, signaling Santo’s troubles are unlikely to cascade in the region, Goldman Sachs Group Inc. said in a note. Yesterday, gold reached a 16-week high.

“There is a slight pullback in gold as the problem in Portugal did not escalate,” Adam Klopfenstein, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview. “There is also some profit taking.”

Gold futures for August delivery fell 0.1 percent to settle at $1,337.40 an ounce at 1:38 p.m. on the Comex in New York. Trading was 26 percent below the 100-day average for this time, according to data compiled by Bloomberg.

Prices climbed 11 percent this year, outpacing gains for indexes of commodities, equities and Treasuries. Investor holdings in exchange-traded products backed by the metal have rebounded this month as turmoil spread in the Middle East and Eastern Europe. Bullion capped the longest run of weekly gains since 2011.

“Gold moved higher, attracting safe-haven buying as financial market concerns re-emerged,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. “There is also a geopolitical dimension.”

Lift Prices

Traders expect haven appeal amid geopolitical tensions to lift gold prices next week, according to a Bloomberg survey.

Silver futures for September delivery declined 0.2 percent to $21.461 an ounce on the Comex, after climbing to $21.63 yesterday, the highest for a most-active contract since March 17. The metal posted a sixth weekly advance, the longest rally since September 2012.

Palladium futures for September delivery rose 0.2 percent to $875.30 an ounce on New York Mercantile Exchange. The price reached $877.75 yesterday, the highest since February 2001. Russia is the world’s biggest producer.

Supplies have been disrupted by a five-month mining strike that ended in late June in South Africa, the top source of platinum and the second-largest for palladium.

Platinum futures for October delivery fell 0.2 percent to $1,513.80 an ounce on the Nymex. Yesterday, the price reached $1,523.80, the highest since Sept. 4.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Steve Stroth

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