Gold Declines Most in Two Weeks as Economic Concerns Ease

Gold futures fell the most in more than two weeks after global economic concerns eased, crimping demand for the precious metal as a haven.

Global holdings in exchange-traded products backed by gold yesterday extended a slump to a five-year low. A manufacturing index in the euro area unexpectedly rose in October, while Spain’s economy showed signs of a further recovery. In the U.S., the four-week average of jobless claims dropped to a 14-year low, government data showed. The dollar rose to a two-week high against a basket of 10 currencies.

Gold fell to a one-week low as equities rebounded and inflation remained muted. On Oct. 6, the metal slumped to the cheapest this year. The price then climbed as much as 6.1 from the low after the Federal Reserve cited slowing foreign economies as a risk to the U.S. That prompted some analysts to push back estimates for an increase in interest rates.

“Investors seem upbeat about the global economy after we saw some good economic numbers,” Miguel Perez-Santalla, a sales and marketing manager at Heraeus Metals New York LLC, said in a telephone interview. “The interest in equities has been revived.”

Gold futures for December delivery declined 1.3 percent to settle at $1,229.10 an ounce at 1:47 p.m. on the Comex in New York, the biggest drop for a most-active contract since Oct. 3. Earlier, the metal touched $1,226.30, the lowest since Oct. 15.

Economic Indicators

In the third quarter, gold slumped 8.4 percent as investors bet that an accelerating U.S. economy would prompt the Fed to raise borrowing costs. Rising rates reduce the metal’s allure because the commodity generally only offers returns through price gains, while a stronger dollar typically cuts demand for a store of value.

Gold extended losses today after a private report showed an index of leading U.S. economic indicators rose in September.

Assets in gold ETPs have dropped 5.9 percent this year after plunging 33 percent in 2013, according to data compiled by Bloomberg. Money managers cut their bullish futures and options Comex bets in eight of the past nine weeks.

“Without seeing a pickup in ETP holdings, the near-term outlook still looks like one where the price action will be driven by short-term speculative and technical decisions,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a report.

Silver futures for December delivery dropped 0.4 percent to $17.158 an ounce. Earlier, the price touched a one-week low of $17.035.

On the New York Mercantile Exchange, platinum futures for January delivery fell 1.3 percent to $1,255 an ounce, the biggest drop in almost two weeks.

Palladium futures for December delivery rose 0.3 percent to $779.30 an ounce. The metal climbed for the fifth straight session, the longest rally in two months.

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