June 22 (Bloomberg) -- Gold was set for its worst weekly loss this year after the U.S. Federal Reserve didn’t resume a debt purchase program even as the economy showed signs of slowing. Silver was poised for its worst week since December.
Spot gold fell as much as 0.3 percent to $1,561.75 an ounce before trading at $1,562.75 by 10:24 a.m. in Singapore, down 4 percent this week, the most since the five days to Dec. 16. Bullion dropped 2.6 percent yesterday, the most since Feb. 29, tumbling with other commodities as the Standard & Poor’s GSCI Spot Index of 24 raw materials slumped 22 percent from this year’s highest close, entering a bear market.
Manufacturing in the Philadelphia region shrank in June at the fastest pace in almost a year and sales of existing homes in the U.S. fell in May, separate reports showed yesterday. The Fed on June 20 extended its program of replacing short-term bonds with longer-term debt by $267 billion through the end of 2012, without announcing further debt purchases.
“Bullion prices dive as the Fed statement echoes in the Market,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a note. “Poor euro-zone economic data and a decline in the euro may have contributed to a drop in gold prices. Near-term momentum may take prices lower, but we believe it may create an attractive point of entry for gold.”
August-delivery bullion was little changed at $1,564.90 an ounce on the Comex in New York. Futures declined yesterday as the slump in equities and commodities drove the dollar up by the most since March against a six-currency basket. The S&P 500 Index fell 2.2 percent for its second-biggest loss in 2012.
Data yesterday showed manufacturing in the euro area shrank for a fifth month in June while a preliminary survey showed output in China may contract for an eighth month. Moody’s Investors Service downgraded 15 global banks, adding to concern that Europe’s fiscal woes are hurting global growth.
Spot silver gained as much as 0.7 percent to $27.0863 an ounce before trading at $26.94. The metal used mainly in industrial applications tumbled 4.5 percent yesterday, the most since February and is 6.1 percent lower this week.
Cash platinum fell for a fourth day, dropping as much as 0.7 percent to $1,429.50 an ounce and was last at $1,430. Palladium also declined for a fourth day, losing as much as 0.5 percent to $606 an ounce, before trading at $606.
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