Gold Heads for Longest Run of Monthly Drops Since 1997

Gold futures fell, capping the longest run of monthly declines in 16 years, as signs of economic optimism curbed demand for the metal as a haven.

Jobless claims in the U.S. dropped in the week that ended Feb. 23, the government said today. German unemployment unexpectedly fell in February amid signs that Europe’s biggest economy is recovering, and Japan’s industrial production in January rose for the second straight month. Gold has dropped 5.8 percent in 2013 after a 12-year rally boosted prices sixfold.

“Gold is no longer the preferred asset as people globally are waking up to the fact that the economic conditions are showing some signs of improvement,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates, said in a telephone interview.

Gold futures for April delivery retreated 1.1 percent to settle at $1,578.10 an ounce at 1:40 p.m. on the Comex in New York. The metal dropped 5 percent this month, the fifth straight decline and the longest slump January 1997.

Yesterday, holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, fell for the seventh straight session, a record slump. They slid 12 metric tons to 1,258.4 tons, the lowest since August.

Assets in a pool of gold ETPs yesterday slumped to a five-month low of 2,508.5 tons. In February, they have dropped 4 percent, the most since April 2008. The Standard & Poor’s 500 Index of equities headed for the fourth straight monthly advance, the longest rally in a year.

Physical Liquidation

“Liquidation of physical gold is the hallmark of bearishness,” Sterling Smith, a Chicago-based commodity futures specialist at Citigroup Global Markets Inc., said yesterday in a telephone interview. “The improving economic conditions are pushing people to more remunerative assets like equities.”

Gold may fall to $1,400 by the end of the third quarter, Smith said.

Billionaire investors George Soros and Louis Moore Bacon cut their stakes in gold ETPs last quarter, government filings showed this month.

Silver futures for May delivery fell 1.9 percent to $28.432 an ounce on the Comex. The price dropped 9.3 percent this month.

On the New York Mercantile Exchange, platinum futures for April delivery fell 1 percent to $1,583.50 an ounce, extending the monthly loss to 5.5 percent.

Palladium futures for March delivery declined 1.5 percent to $734.55 an ounce. The metal slipped 1.5 percent this month. Volume was 29 percent lower than the average in the past 100 days for this time.

Before it's here, it's on the Bloomberg Terminal.