BLBG: Gold Falls in London as Rally to Seven-Month Peak Draws Sellers
Gold declined for the first time this week in London as some investors sold the metal to lock in gains from its rally to a seven-month peak. Silver also fell.
Gold reached $987.71 an ounce yesterday, the highest since July 15, helped by investors’ search for a store of value and record bullion holdings in exchange-traded funds. The metal has gained 10 percent this year, while the Reuters/Jefferies CRB Index of 19 commodities and the Standard & Poor’s 500 Index of shares both have dropped 13 percent.
“There will be some investors looking to book profits in gold,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Even though the long-term bullish momentum is still in place, the market will pause after the recent strong gains.”
Gold for immediate delivery lost as much as $15.98, or 1.6 percent, to $968.92 an ounce and traded at $970.45 an ounce at 9:27 a.m. local time. April futures declined $6.90, or 0.7 percent, to $971.30 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Bullion’s 14-day relative strength index yesterday held above 70, a signal for investors who study technical charts that prices may be set to drop. The commodity reached a record $1,032.70 an ounce in London in March.
Investors have increased gold holdings as central banks cut interest rates and boost spending to help revive economies. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, climbed to a record 1,024.09 metric tons yesterday, placing it just behind the 1,040 tons held by Switzerland, the world’s sixth-largest stockpile.
U.S. President Barack Obama yesterday outlined a $75 billion plan to help as many as 5 million of the country’s homeowners refinance mortgage loans. He signed a $787 billion stimulus bill on the prior day, increasing the government’s commitments to $9.7 trillion to ease the recession and the banking crisis.
Among other metals for immediate delivery in London, silver lost 1.3 percent to $14.18 an ounce. Platinum slid $32, or 2.9 percent, to $1,070.25 an ounce, and palladium was 1.7 percent lower at $215.25 an ounce.
