Gold Futures Decline as Haven Demand Ebbs Amid Europe OptimismDebarati Roy
Gold fell after Dutch Finance Minister Jeroen Dijsselbloem discussed details for the European banking union project, adding to signs that the leaders will act to contain the region’s fiscal crisis and eroding demand for haven assets.
New rules on bank resolution, common standards for national deposit guarantees and a European bank resolution plan are due to be proposed in June, Dijsselbloem said today. The Standard & Poor’s 500 Index reached a record for a fourth straight session.
“Any indication that Europe is working towards a resolution is bad for gold,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Money is flowing into riskier assets like equities.”
Gold futures for June delivery fell 1.3 percent to settle at $1,448.80 an ounce at 1:39 p.m. on the Comex in New York. Bullion dropped 7.7 percent last month, including the biggest two-day drop in 33 years, as some investors lost faith in the precious metal as a store of value.
Billionaire hedge-fund manager John Paulson lost 27 percent in his Gold Fund in April, according to a person familiar with the matter, who asked not to be identified as the information isn’t public. Armel Leslie, a spokesman for the $18 billion New York-based Paulson & Co., declined to comment on the returns.
Assets in exchange-traded products fell 0.3 percent to 2,254.68 metric tons yesterday, the lowest since October 2011, according to data compiled by Bloomberg.
“Money from gold ETFs continues to hemorrhage out, with total holdings in the largest SPDR gold trust now at a three-year low,” Edward Meir, an analyst at INTL FCStone in New York, said in an e-mailed report today. “We think silver will also be pulled lower along with gold.”
Trading was 22 percent higher than the average for the past 100 days for his time of day, according to data compiled by Bloomberg.
Gold rose 4.9 percent in the two weeks ended May 3 on coin and jewelry demand. Trading in the benchmark contract on the Shanghai Gold Exchange sank to 15,995 kilograms (35,263 pounds) yesterday, the lowest since April 12, according to exchange data compiled by Bloomberg.
“Retail consumers are very price-sensitive, so you don’t expect physical buying to go on and on, especially since we’ve come up more than $100 from the low,” said Feng Liang, an analyst at GF Futures Co. in Guangzhou, a unit of China’s third-biggest listed brokerage. “Those who missed the first opportunity are probably hoping for another round of declines.”
Gold imports by India, the world’s largest consumer, may fall after the central bank restricted overseas purchases by banks to reduce domestic demand. Banks will be allowed to import bullion on a consignment basis to meet only genuine needs of exporters of gold jewelry, the Reserve Bank of India said May 3.
Silver futures for July delivery declined 0.6 percent to $23.806 an ounce in New York, the biggest drop for a most-active contract since May 1.
On the New York Mercantile Exchange, platinum futures for July delivery slipped 1.8 percent to $1,481.20 an ounce. Palladium futures for June delivery slumped 2.4 percent to $680.60 an ounce, the biggest fall since April 17.