Gold futures dropped the most in three weeks after the Cyprus bailout curbed demand for the metal as a haven.
Benoit Coeure, a European Central Bank executive board member, said the Cypriot accord isn’t a model for the rest of the region and that the ECB will strive to preserve the euro. Gold prices on average may fall this year for the first time since 2001 as investors shift “away from extreme expectations of an imminent collapse of the global financial system,” CPM Group said.
“People who piled into gold thinking that Cyprus will be a very big deal are coming out,” Jeffrey Christian, the managing director of CPM, a New York-based research company, said in an interview. The “improving” U.S. economy also pushed prices lower today, he said.
Gold futures for June delivery dropped 0.6 percent to settle at $1,597.30 an ounce at 1:37 p.m. on the Comex in New York, the biggest drop for a most-active contract since Feb. 28. Trading was 84 percent more than the average volume in the past 100 days at this time.
The metal has dropped 4.7 percent this year, partly amid signs the U.S. economy is recovering. Gold headed for the second straight quarterly loss, the longest slump since 2001.
Sales of new U.S. houses in February capped the best back-to-back months in more than four years, spurred by near record-low borrowing costs and improving job prospects, government data showed today.
Silver futures for May delivery fell 0.5 percent to $28.679 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for July delivery dropped 1.1 percent to $1,569.80 an ounce. Volume was more than double the 100-day average.
Palladium futures for June delivery advanced 0.5 percent to $761.40 an ounce.