BLBG: Gold Declines in London as Rising Equities Reduce Haven Demand
Gold fell for a third day in London, extending yesterday’s drop by the most in six weeks, as global equities advanced and demand ebbed following a rally last week that sent bullion above $1,000 an ounce.
Stocks in Europe and Asia gained on speculation the U.S. government may not have to take control of America’s biggest banks. The MSCI World Index has slipped 14 percent this year while gold has advanced 8 percent as investors bought the precious metal as a store of value.
“Banking stocks have improved today,” curbing demand for gold as a haven, Bernard Sin, currency and metals trading chief at Swiss refiner MKS Finance SA, said today by phone from Geneva. “Prices had risen too fast and too furiously.”
Gold for immediate delivery lost $9.38, or 1 percent, to $953.30 an ounce by 9:23 a.m. in London. April futures fell $15.10, or 1.6 percent, to $954.40 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Bullion reached an 11-month high of $1,006.29 in London on Feb. 20, as holdings in exchange-traded funds reached records. Gold assets in the SPDR Gold Trust, the biggest such fund backed by bullion, stood unchanged for a fourth day at 1,028.98 metric tons yesterday, according to figures on the company’s Web site. The metal traded at a record $1,032.70 on March 17.
Federal Reserve Chairman Ben S. Bernanke yesterday suggested U.S. banks need not be nationalized and said the government would use supervision to guide major banks. The MSCI World Index had declined the past two weeks as U.S. Treasury Secretary Timothy Geithner failed to convince investors that his plan to rescue U.S. banks would work.
‘Ongoing Deflation’
Bernanke’s comments “helped to improve sentiment slightly and to reiterate the ongoing deflation” amid low commodity prices and a worsening economy, said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Inflation concerns will return to the forefront of the investor agenda, depreciating the dollar and helping to support gold in the long term.”
Among other metals for immediate delivery in London, silver slipped 0.6 percent to $13.67 an ounce. Platinum declined $5.25, or 0.5 percent, to $1,038.75 an ounce and palladium was 1.4 percent lower at $197.75 an ounce.
