Gold Falls for Second Day as Equity, Oil Gains Cut Haven Demand

  • Bullion is still the best-performing metal this month
  • Stocks, crude oil heading for a second straight advance

Gold futures fell for a second straight day as a rally in global equities and a rebound in crude oil cut demand for a haven.

U.S. stocks tracked gains in Asia and Europe as an index of world equities headed for its biggest advance since June 2012. The dollar rose against the euro after European Central Bank President Mario Draghi indicated that policy makers may bolster economic support as soon as March. Oil headed for its biggest two-day increase since 2008.

Gold is this month’s best-performing metal on the Bloomberg Commodity Index, as concern over China’s slowdown and a crash in oil prices to a 12-year low drove demand for haven assets. Traders have pushed back bets on when the Federal Reserve will next raise interest rates. Higher rates would damp gold’s appeal because the metal doesn’t pay interest.

Bullion dropped “because the U.S. dollar is appreciating and stock markets and oil prices are gaining significantly, which points to at least temporarily higher risk appetite,” Commerzbank AG analysts including Daniel Briesemann wrote in a note.

Gold futures for February delivery slipped 0.2 percent to settle at $1,096.30 an ounce at 1:53 p.m. on the Comex in New York, paring this week’s gain to 0.5 percent. Prices are up 3.4 percent this month.

“We could still see gold move higher” following the recent equity rout and shift in U.S. rate expectations, Matthew Turner, an analyst at Macquarie Group Ltd. in London, said by telephone. The Fed’s Jan. 27 meeting and jobs data will remain crucial for gold, he said.

Holdings in exchange-traded products backed by gold rose 2.6 metric tons to 1,500 tons as of Thursday, data compiled by Bloomberg show. Assets are set for a third weekly increase, the longest run since October.

  • An index of 14 gold producers tracked by Bloomberg Intelligence fell 0.6 percent, heading for a second straight weekly decline. Harmony Gold Mining Co., Gold Fields Ltd. and Newmont Mining Corp. were among the companies in the gauge whose shares declined on Friday.

  • Silver futures for March delivery slipped 0.3 percent to $14.057 an ounce on the Comex. Palladium and platinum rose on the New York Mercantile Exchange.
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