Gold Falls in New York as Traders Curb Risk Before EU Bank-Stress Report
Gold fell in New York for the first time in four days as traders reduced risk before the results of stress tests on 91 banks in Europe, where a financial crisis sparked a surge in bullion prices last month.
European Union regulators are examining the strength of banks to determine if they can survive potential losses on sovereign-bond holdings. Gold reached a record $1,266.50 an ounce on June 21, and last month rallied to all-time highs in euro, sterling and Swiss francs.
“There’s just caution on the part of traders,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “People aren’t sure how the markets are going to react, so rather than have a large position in gold, they’re paring back.”
Gold futures for August delivery dropped $2.80, or 0.2 percent, to $1,192.80 an ounce at 11:34 a.m. on the Comex in New York. Before today, gold rallied 9.1 percent this year.
Results of the bank stress test will be released at 6 p.m. in Brussels.
Gold’s losses may accelerate should equities decline after the announcement, because investors are likely to sell the metal to cover losses, Lesh said. Investors may also buy the metal as a haven, he said.
“If things turn out much worse than expected and the euro has a sharp decline, I’d go into gold,” Lesh said.
Silver futures for September delivery gained 9 cents, or 0.5 percent, to $18.21 an ounce on the Comex.
Platinum futures for October delivery rose $20.20, or 1.3 percent, to $1,549.60 an ounce on the New York Mercantile Exchange. Palladium futures for September delivery advanced $7.50, or 1.6 percent, to $464.40 an ounce.