Gold Extends Decline as Cyprus Bailout Plan Seen Hurting DemandPhoebe Sedgman
Gold fell for a third day, poised for the worst run in three weeks, as Cyprus’s bailout damped haven demand even amid concern that its bank-restructuring plan may be used as a template for other European nations.
Gold for immediate delivery lost as much as 0.3 percent to $1,600.14 an ounce and was at $1,602.53 at 3 p.m. in Singapore. Prices touched $1,589.87 yesterday, the lowest since March 15, as the rescue ensured Cyprus averted default. The last time gold fell for at least three days was the period to March 4.
The bailout will see Cyprus Popular Bank Pcl wound down, wiping out bondholders, and will impose losses on some depositors at Bank of Cyprus Plc. While gold is poised for the first monthly gain since September, the precious metal is still set for the first back-to-back quarterly loss since 2001.
“Trading conditions will remain volatile as long as market jitters continue,” Australia & New Zealand Banking Group Ltd. said in an e-mailed note today. Bullion is expected to trade between $1,585 and $1,620 in the near term, it said.
Holdings in gold-backed exchange-traded products expanded for a third day to 2,454.863 metric tons yesterday, according to data compiled by Bloomberg. Still, the holdings have dropped 6.7 percent this quarter, the worst decline since at least 2004, amid signs that the U.S. recovery is gaining traction.
Gold for June delivery lost 0.2 percent to $1,603.30 an ounce on the Comex in New York. Platinum dropped 0.6 percent to $1,576.50 an ounce even as holdings in ETPs gained to an all-time high of 52.144 tons.
Spot silver dropped 0.2 percent to $28.78 an ounce, while palladium was little changed at $757.85 an ounce.