Gold Has Biggest Loss of 2014 as Portugal Concerns Ease
Gold futures posted the biggest decline in almost seven months as Portuguese banking concerns eased and equities gained, diminishing demand for haven assets.
Portuguese 10-year government bonds were set for the biggest two-day advance in a month on speculation that Portugal would contain financial woes at one of its banking groups. The Standard & Poor’s 500 Index added as much as 0.6 percent after Citigroup Inc. reported profit that topped analysts’ estimates.
The drop comes after gold capped the longest run of weekly gains since 2011, partly as missed payments on notes by a parent company of Portugal’s second-biggest bank renewed concern that Europe hasn’t resolved its debt crisis. EU spokesman Simon O’Connor said July 11 that the country has taken steps to shore up its financial system. Goldman Sachs Group Inc.’s Jeffrey Currie reiterated his outlook for lower bullion prices as confidence increases in the economic recovery and inflation remains tame.
“A strong stock market and some stability in the EU” are pressuring gold, Peter Thomas, a senior vice president at Zaner Group LLC in Chicago, said in a telephone interview. “A lot of people were looking at Portugal as a domino effect, and as we saw, O’Connor prevailed and it didn’t have a significant impact.”
Gold futures for August delivery fell 2.3 percent to settle at $1,306.70 an ounce at 1:50 p.m. on the Comex in New York, the biggest loss for a most-active contract since Dec. 19.
Trading was 66 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg show.
Goldman’s Currie reiterated his outlook for prices to drop to $1,050 an ounce by year-end, even as hedge funds add to their bullish holdings for a fifth straight week and assets in exchange-traded products advance.
Goldman has “a tremendous client base that follows what their recommendations say,” Thomas said.
Federal Reserve Chair Janet Yellen will deliver testimony to Congress this week. Bullion jumped 6.1 percent in June as the central bank signaled it would keep interest rates low, boosting demand for an inflation hedge.
Silver futures for September delivery slid 2.5 percent, the most since April 15, to $20.914 an ounce on the Comex.
On New York Mercantile Exchange, palladium futures for September delivery declined 0.4 percent to $872 an ounce. Platinum futures for October delivery fell 1.4 percent to $1,493 an ounce.
To contact the editors responsible for this story: Millie Munshi at email@example.com Joe Richter