Gold futures in New York fell for the first time this week after a government bond sale in Portugal eased concerns that the European debt crisis may widen, reducing demand for a haven investment.
Portugal’s borrowing costs dropped and demand rose at yesterday’s sale of 10-year bonds. Spanish bonds led a second day of gains for Europe’s most-indebted nations today as demand rose at an auction.
“A seemingly successful Portuguese sovereign bond auction has certainly calmed some market players, but fears over indebted peripheral member states in the monetary union are far from completely evaporating,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mailed report today.
Gold for February delivery on the Comex in New York fell $5.30, or 0.4 percent, to $1,380.50 an ounce at 12:21 p.m. London time. The futures rose as much as 0.3 percent to $1,389 yesterday.
Gold for immediate delivery in London fell $6.92, or 0.5 percent, to $1,380.93 an ounce after gaining for three days to the highest price since Jan. 3. The price, which gained for a 10th year in 2010, climbed to a record $1,431.25 on Dec. 7.
Bullion gained to $1,380.75 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,378.75 at yesterday’s afternoon fixing.
Portuguese Prime Minister Jose Socrates said yesterday the country didn’t need external help and the bond sale was a “success.” Investors bid for 2.1 times the 3 billion euros ($3.9 billion) of Spanish five-year bonds sold today, after German Chancellor Angela Merkel said she’s ready to take whatever steps are necessary to stem Europe’s debt crisis.
“Gold may be just drifting back down because risk aversion is no longer of such concern,” David Lennox, a Sydney-based resource analyst at Fat Prophets, said today. Still, a decline in the U.S. currency and potential for further European difficulties may underpin the metal’s price, he said.
Gold may continue to gain support from an uneven economic recovery in the U.S. as unemployment remains “stubbornly high” and the dollar is susceptible to setbacks, Lennox said.
“Even though we have seen a recovery happening, we are still seeing significant headwinds buffet the currency,” he said. Bullion typically moves inversely to the dollar.
Gold assets in exchange-traded products, or ETPs, were little changed at 2,090.96 metric tons yesterday, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,114.6 tons on Dec. 20.
Palladium futures for March delivery added 1.1 percent to $815.40 an ounce in New York, and earlier touched $819.50, the highest price for a most active contract since March 2001. Platinum for April delivery gained 0.4 percent at $1,809.10 an ounce. The two metals are used in automotive pollution-control devices as well as jewelry.
Silver futures for March delivery fell 16 cents, or 0.5 percent, to $29.385 an ounce in New York. A decline today would be the first loss in four sessions.