July 23 (Bloomberg) -- Gold futures declined for the second straight day as a U.S. equity rally to a record crimped demand for the precious metal as an alternative asset.
The Standard & Poor’s 500 Index of stocks has gained 7.6 percent this year. In 2013, gold plunged 28 percent, the most in three decades, as equities surged amid signs of a rebound in the U.S. economy.
Gold has climbed 8.7 percent in 2014 as conflicts increased in Ukraine and the Middle East. Earlier today, the metal rose as much as 0.4 percent after separatists shot down two Ukrainian fighter jets in the same region where a Malaysian passenger plane was destroyed last week, the government said.
“There is definitely some temporary support because of geopolitical tensions, but the strength in the equity market continues to be a big headwind,” Blake Robben, a senior market strategist at Archer Financial Services in Chicago, said in a telephone interview.
Gold futures for December delivery fell 0.1 percent to settle at $1,306.50 an ounce at 1:36 p.m. on the Comex in New York. Trading was 29 percent below the average in the past 100 days for this time, data compiled by Bloomberg show. Yesterday, the price dropped 0.6 percent.
“Without the current geopolitical risks, gold would not be able to hold on to prices above $1,300,” UBS AG said today in a report. “Such risks are holding potential shorts back.”
Holdings in global exchange-traded products backed by the metal funds rose in the previous four weeks amid the violence in Eastern Europe and Israel’s offensive in the Gaza Strip.
Silver futures for September delivery fell 0.1 percent to $20.995 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for October delivery dropped 0.1 percent to $1,486.70 an ounce.
Palladium futures for September delivery declined 0.1 percent to $874.30 an ounce. The price fell for the fourth straight session, the longest slump since Feb. 4. Russia is the world’s top producer of the metal used mostly in pollution-control devices in vehicles.
This year, palladium has jumped 22 percent as auto sales climbed in the U.S. and China, while a five-month strike by miners cut output in South Africa, the second-biggest producer.
To contact the editors responsible for this story: Millie Munshi at email@example.com Patrick McKiernan