RTRS: Gold edges down as stocks rally, ETF at record
Gold edged down on Monday as a stock market rally reduced investors' gold demand after strong gains last week on the Federal Reserve's move toward quantitative easing.
But a consistent rise in holdings of gold-backed securities meant a limited downside for gold below $950 per ounce for now, traders said. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings hit a record 1,114.60 metric tons as of March 20, up 11.31 metric tons or 1 percent from the previous day.
Buying of gold by ETFs, which back the securities they issue with physical stocks of bullion, has picked up pace since the Federal Reserve announced plans to buy $300 billion in longer-dated Treasuries on Wednesday, causing a fall in the dollar and spurring inflation concerns.
SPDR alone has added 45.55 metric tons of gold to its reserves since Wednesday.
But the Fed move as well as expectations that a U.S. plan to rid banks of $1 trillion of toxic assets was closer to being implemented fueled optimism about the global economy, helping send Asian stocks to a two-month high.
Spot gold was trading at $950.50 ounce at 11:01 p.m. EDT, versus New York's notional close of $950.90 on Friday, when it rose as high as $966.70, its highest level since February 25.
"A strong performance in stock markets usually soaks up money, and gold is down today because of that," said Yuki Sonoda, an adviser at Daiichi Commodities Co.
"It's a choice for investors between gold-backed securities and equities, as they are similarly liquid and easy to access," he said.
Tokyo's Nikkei share average rose more than 2 percent to a six-week high, while U.S. stock futures rose more than 1 percent in electronic trading.
Last week gold rose 2.6 percent, the biggest weekly gain since the week to February 20, during which it briefly topped $1,000.
U.S. gold futures for April delivery fell $4.7 per ounce to $951.50, adding to a $2.60 fall in the previous session.
Net noncommercial long positions rose 3.9 percent to 150,395 lots in the week to March 17, a report by the U.S. Commodity Futures Trading Commission showed, a sign of possible profit-taking to follow after a volatile market last week.
Among other precious metals, spot platinum fell to $1,097.50 an ounce in a retreat from a near six-month high of $1,127.50 marked on Friday.
