Sept. 23 (Bloomberg) -- Gold headed for its worst weekly performance in more than four months as investors sold the metal alongside global equities and other commodities on concern the world economy will falter.
Immediate-delivery gold traded little changed at $1,740.07 an ounce at 3:34 p.m. Singapore time, after swinging between gains and losses. It earlier fell to a one-month low of $1,720.53. The metal is down 3.9 percent this week, the biggest drop since the period to May 6. December-delivery bullion in New York declined as much as 1.1 percent to at $1,722.30, also the lowest in a month, and traded at $1,742.50.
“Gold has been caught up in the overall flight to the exit, but in a normal, sensible world, we should expect to see some support from the fear and trepidation investors are facing,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., wrote in an e-mail.
Global stocks entered a bear market for the first time in more than two years, oil touched a six-week low and copper fell to the lowest level in a year on concerns that the debt crisis in Europe may escalate as the U.S. faces another recession. The Federal Reserve said Sept. 21 there are “significant downside risks” to the outlook, driving the dollar to a seven-month high against a six-currency basket yesterday.
“The U.S. dollar rallied on a flight to safe haven assets, putting downward pressure on the gold price,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail.
Central bankers and finance ministers discuss the outlook today at the annual meetings of the International Monetary Fund and World Bank in Washington. Moody’s Investors Service today downgraded eight Greek banks amid a pledge by Group of 20 finance chiefs that they are “committed to a strong and coordinated international response to address the renewed challenges facing the global economy.”
Gold, up 16 percent since the end of June, is still set for the best quarterly gain since 1986, after reaching a record $1,921.15 on Sept. 6, as investors seek to hedge against other depreciating assets and central banks look to diversify reserves.
Bullion held in exchange-traded products was little changed at 2,236.068 metric tons yesterday, data compiled by Bloomberg show. The holdings reached a record 2,298.4 tons on Aug. 8. Central banks, the biggest holders in the world, have been net buyers of the metal for the first time in a generation.
Russia’s central bank increased its gold reserves to 27.2 million troy ounces last month, from 27 million at the end of July, Bank Rossii said on Sept. 20, joining Thailand, South Korea and Mexico in adding the metal to their coffers this year.
Cash silver tumbled as much as 4.5 percent to $34.2675 an ounce, extending yesterday’s 9.6 percent slump, before trading at $34.9762 an ounce. Spot platinum advanced as much as 1.1 percent to $1,706.25 an ounce, while palladium lost as much as 1.5 percent to $641 an ounce.
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