- Bullion falls a second day, extending drop from one-year high
- Newcrest Mining CEO sees gold trading in steady range
Gold, the year’s best-performing commodity, dropped the most in almost seven months as rebounding global equities cut demand for a haven.
The metal slid as much as 2.5 percent in London on Monday. European stocks headed for the biggest two-day gain in more than four years as People’s Bank of China Governor Zhou Xiaochuan expressed faith in the economy, while a stronger dollar eroded the bullion’s appeal as an alternative investment.
Gold surged to a one-year high last week and investors have been hoarding metal through bullion-backed funds as a gauge of world stocks entered a bear market and the Federal Reserve signaled it may delay further monetary tightening. Low borrowing costs boost gold’s appeal because it doesn’t pay interest like some other assets.
“Equity markets worldwide, especially in Asia but also in Europe today, are on the rise,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by phone. “As a safe haven, gold would be less in demand.”
Gold for immediate delivery slid 2.3 percent to $1,209.30 an ounce in New York, a back-to-back daily decline for the first time in a month, according to Bloomberg generic pricing. Prices are still up 14 percent this year, the best performance in the Bloomberg Commodity Index of 22 raw materials.
Chinese trading resumed after the week-long Lunar New Year holiday, while U.S. markets are closed Monday for the Presidents’ Day holiday.
Bullion miners also fell, with the five-member FTSE/JSE Africa Gold Mining IndexIndex dropping 4.3 percent. The gauge touched the highest since 2013 last week, aided by a weaker rand which has cut costs and for South African companies.
Gold prices will probably remain steady, Sandeep Biswas, the chief executive officer of Newcrest Mining Ltd., said on a conference call. The company earlier Monday reported first-half profit dropped 55 percent.
Holdings in bullion-backed exchange-traded products increased 0.3 percent to 1,592.3 metric tons on Friday, the highest since July, data compiled by Bloomberg show. They’ve expanded 8.9 percent this year.
In other metals:
- Silver slumped as much as 3.4 percent, the most since December, to $15.2125 an ounce in London. It was last at $15.2931.
- Platinum dropped 1.8 percent and palladium lost 1.2 percent.