BLBG: Gold Falls From Three-Month High as Investors Sell After Rally
Gold fell for the first time in four sessions in London after a rally to a three-month high prompted some investors to sell the precious metal.
Gold holdings in exchange-traded funds, including the SPDR Gold Trust and Zuercher Kantonalbank’s ETF, have risen to records as investors concerned about global recession sought a haven. The increase of a third of a ton announced today by SPDR was the smallest in the past five days that the fund reported.
“People are trying to take profit before it disappears,” Bernard Sin, currency and metals trading chief at Swiss refiner MKS Finance SA, said by phone from Geneva today. “ETFs have put on large positions the past week” as investors bought gold as a haven, he said.
Gold for immediate delivery lost as much as $10.40, or 1.2 percent, to $892.95 an ounce and traded at $896.78 by 12:56 p.m. in London. February futures fell $12.90, or 1.4 percent, to $895.90 in electronic trading on the Comex division of the New York Mercantile Exchange.
The metal declined to $896 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $910.25 at yesterday’s afternoon fixing.
Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, rose to a record 832.9 metric tons, according to data on the company’s Web site.
Fund Demand
ETF demand may rise again if prices fall to between $850 an ounce and $870, Sin said. “People don’t trust the blue chips any more,” he said of the stock market, calling ETFs a good choice for investors. The U.K. benchmark FTSE 100 Index of shares lost almost a third of its value in 2008.
The dollar has strengthened this year, benefiting investors holding gold in sterling and euros. Bullion reached a record 659.23 pounds on Jan. 23 and touched an all-time high of 699.26 euros the same day, according to Bloomberg data.
“In Europe, there’s growing concern about the fate of the euro,” John Clemmow, an executive director at UBS AG, said in a Bloomberg television interview today. European investors “have become much more interested in gold at the moment.”
Imports of gold to India, the world’s biggest buyer of the precious metal, have dropped as record prices in the country prompt consumers to recycle more old jewelry, Bombay Bullion Association Ltd. said. Imports slipped to between 1.8 tons and 2 tons this month from 24 tons a year ago, it said.
Among other metals for immediate delivery in London, silver declined 0.9 percent to $11.96 an ounce. Platinum slipped $11.50, or 1.2 percent, to $950.50 an ounce, and palladium was 0.7 percent lower at $190 an ounce.
