Gold Drops a Third Day as Cyprus Bailout Curbs Investor Demand
Gold fell for a third day in London on speculation that a rescue for Cyprus will curb demand for the metal as a protection of wealth.
Bullion fell to $1,589.87 an ounce yesterday, the lowest since March 15, as Cyprus agreed on a bailout. European Central Bank executive board member Benoit Coeure said the ECB will do everything it can to preserve the currency and that the rescue isn’t a model for the rest of the region. Mongolia and Kazakhstan were among nations that raised gold reserves last month, International Monetary Fund data show.
“A deal between Cyprus and European leaders has reduced safe haven demand for gold,” Mumbai-based Kotak Commodity Services Ltd. said today in a report. “Market players remain concerned about health of euro-zone economy and this has limited downside.”
Gold for immediate delivery fell 0.5 percent to $1,596.43 by 10:15 a.m. in London. Futures for June delivery were 0.6 percent lower at $1,597.30 on the Comex in New York. Futures trading volume was 14 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
While gold is heading for the first monthly gain since September, the metal is still set for the first back-to-back quarterly loss since 2001. Prices are down 4.7 percent this year amid signs the U.S. economy is improving and as Federal Reserve policy makers debated the pace of stimulus.
Mongolia’s gold reserves expanded 1.5 metric tons in February and Kazakhstan’s holdings increased 4.9 tons, data on the IMF’s website show. Azerbaijan and Ukraine also added to reserves, while Canada and the Czech Republic reduced them.
Silver for immediate delivery was down 0.2 percent at $28.7725 an ounce in London. Palladium fell 0.5 percent to $753.95 an ounce. Platinum dropped 1 percent to $1,569.90 an ounce.
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